This article first appeared in The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025
UEM Group Bhd is understood to have been given the mandate by the federal government to acquire a controlling 51% stake in CRRC Rolling Stock Center (Malaysia) Sdn Bhd (CRRC RSC) — the Chinese company from which rail operator Keretapi Tanah Melayu Bhd (KTM) is planning to lease 62 new passenger train sets at a cost of RM10.7 billion in 2027 for a 30-year period.
In response to questions sent by The Edge on the potential acquisition, a representative of UEM Group says, “We decline to comment on the matter.”
Two industry sources, however, say it is more or less confirmed that UEM Group will undertake the acquisition of the controlling stake in CRRC RSC, which has an assembly plant in Batu Gajah, Perak, and has contracts to provide rolling stock to KTM.
A check on the Companies Commission of Malaysia website indicates that CRRC’s unit in Malaysia is 70%-controlled by CRRC Zhuzhou Locomotive Co Ltd and 30% by CRRC (Hong Kong) Co Ltd.
A source familiar with the talks says UEM Group appears to be the front runner to acquire a 51% stake in CRRC’s Malaysian unit as it has the requisite financial clout to do so despite lobbying by a number of companies for potentially large and lucrative contracts from the Malaysian government. While details are scarce, there have been media reports that the government will pay CRRC an average of RM250 million per annum over a 30-year period.
As at Dec 31, 2023, CRRC RSC had total assets of RM328.25 million while its total liabilities stood at RM143.61 million. In its financial year ended Dec 31, 2023, the rail asset manufacturer suffered an after-tax loss of RM18.26 million on revenue of RM10.84 million. This was the first loss suffered by the company in five financial years.
Over the past five years, its best results were in FY2021 when it managed to post an after-tax profit of RM2.51 million on revenue of RM30.96 million. In FY2020, CRRC RSC posted a revenue of RM364.55 million but only managed an after-tax profit of RM2.17 million.
With an enormous RM10.7 billion worth of deals in sight, CRRC RSC’s earnings are likely to get a hefty boost and UEM Group will likely be a beneficiary of the contracts.
News that the government was looking to take a 51% stake in CRRC RSC emerged in August when news reports highlighted the plan, which is said to have received cabinet approval on Aug 14 last year as it is aimed at ensuring majority control for Malaysia, as well as technology transfer to local players. A requirement of 40% local workforce participation has also been put in place by Putrajaya.
Another positive in favour of UEM Group is that it is wholly owned by sovereign wealth fund Khazanah Nasional Bhd. UEM Group has five business segments, namely expressways under highway operator PLUS Malaysia Bhd in a 51:49 joint venture with the Employees Provident Fund; township and property development held by UEM Sunrise Bhd (KL:UEMS), in which UEM Group has a 69.56% stake; engineering and construction via wholly-owned UEM Builders Bhd; asset and facility management under UEM Edgenta Bhd (KL:EDGENTA); and green industries through UEM Lestra Bhd. Cement Industries of Malaysia Bhd or CIMA, which is wholly owned by UEM Group, is likely to fall under the construction umbrella.
In its financial year ended Dec 31, 2024, UEM Group raked in RM724.92 million in after-tax profit on the back of RM6.32 billion in revenue. As at Dec 31 last year, it had total assets of RM27.09 billion while its total liabilities stood at RM13.1 billion. In the period in review, it had retained earnings of RM6.35 billion.
It is not clear if incumbent contractors undertaking coach-related work for KTM will be adversely impacted by the stake acquisition.
For instance, at the end of June this year, Destini Bhd’s (KL:DESTINI) 70% unit, M Rail Technics Sdn Bhd, secured a RM71 million contract from the Ministry of Transport for the maintenance, repair and overhaul services of nine electric train sets for a 24-month period.
Until March last year, Aroma Teraju Sdn Bhd, a company controlled by the Ministry of Finance, was a substantial shareholder of Destini but it has since pared its shareholding to below the 5% band that requires disclosure.
In February this year, privately held SMH Rail Sdn Bhd secured a contract to acquire old locomotives and wagons to refurbish and lease back to KTM for a 25-year period but this contract is understood to involve cargo trains.
There are other companies as well, such as Hartasuma Sdn Bhd, that offer rolling stock and rail services. What sort of impact will UEM Group’s potential emergence in CRRC RSC have on them? Only time will tell.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.