Kenanga Research said the private sector is underpinned by the recent investments in new semiconductor foundries and data centres.
PETALING JAYA: Kenanga Research is keeping its “bullish” outlook for the construction sector, driven by the impending rollout of mega infrastructure and flood mitigation projects, coupled with private sector building jobs.
The research house stated that the private sector is underpinned by the recent investments in new semiconductor foundries and data centres, as well as by the strong showing of companies under its coverage for the first quarter ended March 31, 2024 (1Q24).
“IJM Corp Bhd
had surpassed our forecast for the fiscal year ended March supported by the positive performance of its Kuantan Port backed by tariff hikes,” it said.
Kenanga Research noted that Kerjaya Prospek Group Bhd’s 1Q24 core profit rose 14% year-on-year (y-o-y) on a 13% hike in revenue on higher billings from construction as well as on its new property project called The Vue @ Monterez.
Kenanga Research said Gamuda Bhd’s core profit for the six months ended January only grew 2% y-o-y, despite doubling its revenue.
This could be due to a lower construction margin on slight-margin overseas projects which were mostly at the initial stage of implementation.
The research house, however, pointed out that the group has secured three sizeable contracts since April comprising data centre packages worth RM1.74bil, segment one civil work of the Penang Light Rail Transit, estimated to be worth between RM4.6bil and RM5bil and a high-capacity signalling project in Perth, Australia.
“With its year-to-date (y-t-d) FY24 contract wins of RM15.1bil to RM16bil being on track to surpass its job win target and our assumption of RM25bil over two years in FY24 and FY25, we raise our job wins assumption for the period to RM27bil,” it said.
The research house said Sunway Construction Group Bhd’s 1Q24 core profit rose by a slower 4% y-o-y despite a 16% hike in revenue, due to the doubling of its finance cost, largely to fund its projects in India.
The group has also secured a RM748mil data centre job in Cyberjaya in addition to a RM1.5bil data centre project for Yellowwood in Johor, boosting its y-t-d job wins to RM3.3bil.
Other contract wins by companies under the research house’s coverage that boosted its outlook for the construction sector include IJM securing a total of RM3.73bil new construction jobs in FY24, Kerjaya Prospek winning six new contracts worth a total of RM978.7mil and Kimlun Corp Bhd bagging new contract jobs worth a total RM660.9mil.
Separately, the research house cited Master Builders Association Malaysia president Oliver Wee as projecting that the Singapore-Johor special economic zone, proposed Kuala Lumpur-Singapore high-speed rail and Maharani energy gateway would buoy the construction sector over the medium to long term.
