Singapore - KL Rail

Singapore - KL Rail: UOBK discusses Sector implications from the SG-Msia Rail impact i) Aviation UOBK sees strong possibility that SIA (Sell, TP $10.70) would have to give up up to 80% of capacity along the SG-KL route following completion of the high speed rail (HSR). The house notes SATS (Sell, TP $2.70) which provides inflight catering, will also be marginally impacted by a reduction in meals (primarily drinks), as well as baggage handling. ii) Construction UOBK sees Yongnam, a structural steel contractor and specialist civil engineering solution provider, as one of the main beneficiaries in rail construction due to its history of securing contracts for the Downtown Line. Meanwhile, Pan United supplies 85% of the Downtown Line concrete requirement. Kori, which provides structural steelwork services and tunneling services in Spore, Dubai and Lsia, has been involved in the construction of the Singapore MRT North South Line and East West Line, Putrajaya MRT in Msia and Dubai Metro Line in the Middle East. iii) Hospitality / Gaming The introduction of HSR will further boost visitors from Msia. Key beneficiaries include hotel operators, and REITs, such as Global Premium Hotels and CDLH Trust. There is unclear impact on Genting SP as there may be increase in patronage from Klang Valley to Singapore, but offset by Singaporeans going up to Genting Highland given lower cost. iv) Property Increase in bilateral ties may benefit developers with presence in Msia, eg CapitaLand, Wing Tai, Lum Chang.