Malaysia - Construction, Building Materials etc

[winston]

Connecting the Pearl of the Orient by rail

Maintain POSITIVE – GAM preferred Penang LRT pick

We visited the public inspection booth for the Penang LRT Mutiara Line project.

Of great interest to us is the proposed 6 km cross-sea rail link between Penang Island and Seberang Perai.

It is targeted for award in Jul 2026 or 3 months from now.

Due to its complexity, we understand that the job value could range between a sizeable MYR5b and MY8b.

In our view, potential lead contractors are GAM and MMC Engineering while potential subcontractors are YTL, MRC and Dhaya Maju Infrastructure (Asia).

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/524044.pdf

[winston]

Construction (OVERWEIGHT)
A decent start to the year

Domestic contract awards in 1Q26 came in at RM10.8bn (+13% QoQ, -34% YoY).

The YoY dip arises from the sizable infra awards seen in 1Q25 at c.RM11bn (Penang LRT and LRT3 reinstatement project).

Despite uncertainties in 2Q26, we expect full-year job flows to remain resilient versus 2024-2025’s run-rate underpinned by
(i) second wave of DC project rollouts,
(ii) imminent formalisation of large water schemes and
(iii) Penang LRT Segment 2 and Systems package.

Valuations are turning more palatable (KLCON: 15x FY27f) due to sector wide derating since the Iran war.

Maintain OVERWEIGHT with top picks being Gamuda (BUY; TP: RM5.60) and Kimlun (BUY; TP: RM2.01).

Source: HLIB

[winston]

Construction sector poised for steady year

The anticipated rebound in 2H26 will likely be driven by the finalisation of several DC tenders and greater clarity in the timeline surrounding the rollout of large-scale infrastructure projects.

Domestic contract awards reached RM10.8bil in the first quarter of financial year 2026 (1Q26), up 13% quarter-on-quarter but down 34% year-on-year due to the absence of large infrastructure projects seen a year earlier.

Commercial and residential projects were a key contributor, accounting for RM4.9bil or nearly half of total awards.

Residential job flows may soften in the second quarter as developers and contractors adopt a more cautious stance.

Smaller contractors or those with fixed-price legacy jobs are more exposed, particularly if energy-driven cost inflation persists longer than expected.”

Source: The Star

https://www.thestar.com.my/business/bus ... teady-year

[winston]

Laying The Path Forward

Malaysia’s construction sector will see manageable impact from the ongoing US-Israel-Iran war, delivering estimated earnings growth of 15% in 2026 underpinned by accelerated progress billing and improved profit margins.

The sector upcycle is well supported by resilient DC job flows and tenderbook, with potential RM16b-18b of contracts to be awarded in the coming 1-2 years.

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

Source: UOBKH

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

[winston]

Malaysia Construction Prepare for the second coming of the data centre wave
Maintain POSITIVE view

Data centre construction job wins spiked in 4M2026 with MYR5.8b of contracts secured (62% of 2025 total) and average job wins rising to MYR1.15b from MYR771m in 2025.

Beyond Johor, new clusters have emerged in Port Dickson and Serendah.

Our visits reveal that both sites are advancing toward piling after earthworks.

From these 2 sites, we estimate a whopping MYR18.4b–MYR27.2b of potential job wins with MYR14.9b–MYR23.7b still available.

SCGB is our top pick for exposure to this theme.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/529477.pdf

[winston]

Malaysia Construction: MEP Accelerating MEP job flow backed by DC pipeline visibility

Positive on job opportunities for the MEP chain

Data centre (DC) contract flows to listed contractors have trended strongly upward, reaching MYR12.3b in 2025 (+56.5% YoY).

Momentum appears set to extend into 2026, with YTD awards already at MYR7.4b.

We expect a step-up in MEP work package awards in 2Q26, driven by the rollout of subcontracting packages tied to the MYR10.3b of main contractor awards in 2025.

Our top picks for this theme are Kee Ming and MN Holdings.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/531697.pdf