Kuala lumpur: Data centre projects are anticipated to remain a pivotal growth driver for Malaysia's construction sector, aided by hyperscaler expansion, increasing investments in digital infrastructure, and escalating power requirements.
According to BERNAMA News Agency, MBSB Bank Investment Bhd (MBSB IB) highlighted in a research note that major construction companies such as Gamuda Bhd, IJM Corp Bhd, and Sunway Construction Group Bhd (SunCon) are reaping benefits from the burgeoning data centre developments in Malaysia.
MBSB IB noted that these companies' expertise in digital infrastructure and industrialised building systems (IBS) has enabled them to secure substantial data centre projects, especially from hyperscale clients with critical timelines. As of December 2025, Tenaga Nasional Bhd (TNB) maintained a pipeline of 56 data centre projects with a maximum demand of 7.5 gigawatts (GW), where 35 projects with a combined demand of 4.5GW were operational, and 18 new electricity supply agreements totaling 1.7GW were signed within the year.
The research further revealed that major contractors like Gamuda, IJM Corp, and SunCon are benefiting from the increasing demand for hyperscale data centre facilities, securing significant contracts from global technology firms. With major data centre construction contracts worth between RM13 billion to RM14 billion and several mechanical and electrical packages expected to be awarded in the second half of 2026, data centres are projected to continue being a crucial source of order book replenishment and earnings growth for the sector over the medium term.
MBSB IB's review of the sector's 1Q 2026 results indicated mixed earnings, with Gamuda and SunCon surpassing expectations, while IJM Corp, WCT Holdings Bhd, and Malaysian Resources Corporation Bhd observed softer earnings. Despite this, underlying earnings remained stable, driven by stronger progress billings, healthy order book replenishment, quicker project turnaround, and improved margins from data centre projects.
The research house reported that the value of construction work increased by 8.5 per cent year-on-year in 1Q 2026, marking the sector's 13th consecutive quarter of growth, chiefly supported by civil engineering works, non-residential buildings, and specialised construction activities. MBSB IB maintained a positive outlook on the sector, highlighting Gamuda, SunCon, and Malayan Cement Bhd as top picks due to robust construction activity, data centre investments, and infrastructure developments expected to sustain growth prospects.
Additionally, MBSB IB upgraded its recommendation on SunCon to 'Buy' from 'trading buy,' maintaining a target price of RM7.90, citing its strong execution track record, substantial order book, and exposure to data centre projects.