Malaysia - Construction, Building Materials etc

[winston]

Buoyant outlook for building sector

RHB Research is maintaining its “overweight” call on the construction sector, highlighting resilient earnings and robust job flows, particularly from data centre (DC) developments and water infrastructure, alongside other infrastructure projects.

The research house sees contractors continuing to book better progress billings, having recorded a total work value of RM42bil in the final quarter of 2024 – the highest on record.

Source: The Star

https://www.thestar.com.my/business/bus ... ing-sector

[winston]

Construction – Malaysia Pouring In Concrete And Steel

While the broad market remains under pressure due to unprecedented global economic headwinds, the Malaysian construction sector resisted these tensions with a stellar outperformance in 1H25.

Large-cap stocks within the sector are gaining ground, supported by robust orderbook replenishment and earnings delivery.

Maintain OVERWEIGHT as the sector upcycle will be well supported by selective infrastructure and DC projects.

Our top picks are still Gamuda, IJM and Kerjaya.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

Power Infrastructure (OVERWEIGHT)
Still bullish

We stay Overweight on the power infrastructure sector into 1H26, supported by sustained job flows from Tenaga and data centres, with LSS5 and LSS5+ set to add a fresh leg of grid and substation demand.

We expect earnings momentum to carry through 2026, led by M&E contractors and cable manufacturers.

Importantly, tighter financing conditions are increasingly constraining smaller unlisted players, which should continue to skew project awards toward listed names with stronger balance sheets and funding access.

This is further reinforced by policy support - notably MIDA’s cable import restrictions and Tenaga’s preference for local contractors, which create barriers to entry for foreign competitors.

Against this backdrop, we remain constructive on the sector, with MNH (BUY; TP: RM2.23) and SCGBHD (BUY; TP: RM2.59) as our top picks.

[winston]

Malaysia’s construction sector set to gain in 2026 as projects translate into earnings — RHB

By Emir Mahidzar

KUALA LUMPUR (Jan 5): The construction sector remains attractive despite a decline in total contract value last year, said RHB Investment Bank Bhd, citing 2026 as the year of "execution" where contracts get translated into earnings.

In a report on Monday, RHB maintained an 'overweight' momentum on the construction sector, with Gamuda Bhd (KL:GAMUDA) (target price: RM7), Kerjaya Prospek Group Bhd (KL:KERJAYA) (target price: RM3.45), and Sunway Construction Group Bhd (KL:SUNCON) (target price: RM7.32) being its top picks to buy.

Despite a 12.6 % year-on-year decline in value of contract from RM231.6 billion in 2024 to RM202.5 billion in 2025, RHB views this to not be a major issue for the construction (sector), as 2024 was the highest contract value awarded since 2016.

RHB added that the construction sector remains steady as the government had planned a gross development expenditure of RM81 billion, implying 2026 as the first year of the 13th Malaysia Plan (2026-2030).

"We envisage upcoming infrastructure awards to take place in 2026, namely the systems package and Segment 2, also Mass Rapid Transit 3 is likely to take place in 2027 after the land acquisition process," highlighted RHB in its report.

The analysts highlighted some key infrastructure project pipelines in 2026, including the Penang Light Rail Transit (LRT) Mutiara Line, Sungai Klang Link with an estimated value of RM 8-10 billion, Trans-Borneo Railway in third quarter of 2026, Johor Bahru Elevated Autonomous Rapid Transit, and the water infrastructure project in Perak-Penang and Kedah.

According to the report, the private sector remains a key driver for the non-residential category specifically within data centre (DC) job flows, which grew by 6% to reach RM159.6 billion in contract value in 2025.

RHB recollected major DC contract awards to Gamuda in Eco Business Park V for RM2.1 billion and IJM Corp Bhd (KL:IJM) in Elmina Business Park for RM2.1 billion in 2025.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/788007

[winston]

Construction (OVERWEIGHT)
Room to run further

We maintain an OVERWEIGHT stance into 2026, supported by an ongoing orderbook expansion phase as sector job flows are expected to sustain at around the 2024-2025 run-rate.

In our view, the next leg of replenishment should remain anchored by multi-year hyperscale DC rollouts, a deepening water capex pipeline and follow-through packages from Penang LRT, while Johor-SG SEZ infra projects and progress on JB E-ART provide additional upside.

We also expect recent logistics-driven cost pressure to normalise gradually this year as the crackdown ends and capacity adjusts.

Valuations at current levels still leave room for upside, in our view.

Top picks are Gamuda (BUY; TP: RM6.88) and IJM (BUY; TP: RM3.40).

Source: HLIB

[winston]

Construction: Building To Last

The Malaysian construction sector is poised to outperform in 2026, with an estimated earnings growth of 15-18% in 2026 underpinned by accelerated progress billing and improved profit margins.

The sector upcycle is well supported by industry statistics such as rising orderbook replenishments, value of construction work completed, and strong tenderbook from both public infrastructure and private job flows (DC-related).

Maintain OVERWEIGHT; top picks are Gamuda, Suncon and Kerjaya.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

Malaysia Construction Still has spring in this sector’s steps

Maintain POSITIVE – Top pick still GAM

For 2026, we posit 5 themes for the Malaysian construction sector. They are: -
(i) the JSSEZ,
(ii) industrial parks,
(iii) second ‘wave’ of data centre jobs and subcontracting of MEP jobs,
(iv) RE assets; and
(v) water assets.

We believe GAM is best positioned to capitalise on these themes. SCGB remains a HOLD pending more consistent job wins.

Our other BUY calls are on CMS, MNHLDG, SOLAR, PEKAT and BMGREEN. GAM remains our top pick.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/506038.pdf

[winston]

Robust demand for cement and aluminium

It noted that in 2025, London Metal Exchange (LME) average prices reached US$2,630 per tonne – up 8.6% y-o-y, in line with its US$2,620 per tonne forecast, while demand for cement remains steady, driven by the 13th Malaysia Plan (13MP) amid falling coal prices.

Source: The Star

https://www.thestar.com.my/business/bus ... -aluminium

[winston]

A more aggressive second DC wave

Second phase of DC rollout is likely to be more aggressive, in our view.

Our base case assumes Gamuda will win 5 out of 11 Pearl Computing DCs but this would be more of a share price catalyst rather than an EPS boost.

Suncon is our top DC pick, as we expect it to see the most material impact on share price, EPS and TP with a maiden Pearl Computing win.

Source: CGS

https://rfs.cgsi.com/api/download?file= ... 2F3D9169E4

[winston]

Malaysia Construction

When oil moves, construction follows

Maintain POSITIVE and BUYs on GAM, CMS & PLINTAS

Higher oil prices could raise construction costs through higher diesel and building material prices.

For building materials, cement prices may see moderate pressure via higher thermal coal prices, steel prices are likely to remain stable due to weak global demand, and bitumen prices used in road construction may see some pressure as it is closely tied to oil prices.

Overall, we gather that the earnings impact on listed companies such as GAM, CMS, and PLINTAS are expected to be manageable for now.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/520757.pdf