PETALING JAYA: More upsides may be in store for the construction sector should key national projects be rolled out as planned, according to a research house.
Among the factors that could help boost this space are stabilised raw material prices and the improving labour shortage situation.
Hong Leong Investment Bank Research (HLIB) said there are further opportunities from among the projects such as the mass rapid transit 3 (MRT3), highways, flood mitigation jobs and hospitals, among others.
It noted that the recently passed first quarter saw domestic contract awards to listed contractors totalling some RM7.06bil, which is a strong 215% jump year-on-year.
“The quarter was private sector-driven, making up 80% of contract values while public infrastructure was relatively slow with Budget 2023 having just been passed recently,” HLIB Research said.
Among other factors that drove recent contract awards in the first quarter is the delayed award decision from the fourth quarter of last year, following the conclusion of the 15th General Election last year.
“For the first quarter, we see that 55% of contracts awarded coming from private sector building or housing jobs, 24% from multinational companies-awarded data centre projects and the remainder from public infrastructure jobs (RM1.3bil),” the research house said.
The previous quarter was also a massive quarter for Sunway Construction Bhd as it had received some RM2.3bil worth of contracts.
The research house noted several notable projects that had been outlined under Budget 2023 include the highway widening works in Johor, airport expansion in Penang and Subang.
“Additionally, we expect to see more opportunities in flood mitigation projects worth RM13bil and the MRT3 project sometime in the second half of the year,” said the research house.
