RHB Investment Bank Bhd (RHB Research) has maintained its OVERWEIGHT stance on the construction sector, highlighting Gamuda, Sunway Construction and Binastra as top picks, with analysts emphasising that opportunities remain strong across both data centre and non-data centre projects.
Out of the nine companies under coverage that reported results, four exceeded expectations, including SCGB and Kerjaya Prospek, while five fell short. The research house noted that contractors remain busy with existing and upcoming jobs, as the total value of work done in the second quarter of 2025 hit a record RM43.9 billion, up 13% year-on-year.
On the data centre front, RHB Research pointed to Tenaga Nasional’s five electricity supply agreements signed this year for seven data centre projects, with a combined electricity demand of 733MW. Using a conservative power usage effectiveness ratio of 1.4, this demand could translate into 524MW of capacity, worth around RM10.5 billion in construction value.
Johor alone has 1,473MW of committed capacity, while Kuala Lumpur has 960MW planned, and Pearl Computing Malaysia’s 389-acre land in Port Dickson could host between 500MW and 1GW. Altogether, these three areas could deliver 2,933MW to 3,433MW of planned capacity, translating to RM58.7 billion to RM68.7 billion in construction value.
Beyond the data centre segment, analysts said the project pipeline remains promising. Awards for Johor’s elevated Automated Rapid Transit system, estimated at RM6 billion to RM7 billion, are expected by year-end, with three consortiums believed to have submitted proposals to the Public Private Partnership Unit.
Meanwhile, tenders for the Penang Light Rail Transit system, worth RM3 billion to RM4 billion, are expected in the second half of 2025, while Segment 2 of the Penang LRT from Komtar to Penang Sentral, valued at RM5 billion to RM6 billion, could see tenders advertised in October. Analysts added that the upcoming 13th Malaysia Plan, which allocates a record RM430 billion in development expenditure between 2026 and 2030, should further pave the way for infrastructure growth.
Valuation-wise, the Bursa Malaysia Construction Index is trading at a forward price-to-earnings ratio of 18.3 times. RHB Research believes there is room for valuations to move higher, noting that the index was at 15 to 16 times during the 2017 construction upcycle, even without the additional boost from data centre projects.
The research house cautioned, however, that risks include slower-than-expected job rollouts, labour shortages and a potential scaling down of data centre investments into Malaysia.
