Kuala lumpur:<Text>

Hong Leong Investment Bank Bhd (HLIB) remains constructive on Malaysia's power infrastructure sector into the first half of 2026 (1H 2026), driven by strong order flows from Tenaga Nasional Bhd (TNB), data centres, and solar.

According to BERNAMA News Agency, a research note from HLIB highlights that the financial year 2026 (FY2026) is shaping up to be particularly strong, propelled by the rollout of large-scale solar (LSS) 5 and LSS5+, which further expands demand for grid and substation works. TNB's call-ups are expected to expand in FY2026 as deferred FY2025 capital expenditure (capex) normalises following the tax overhang. This reinforces the view that grid investment will remain elevated, with RM3.0 billion to RM3.5 billion of annual base capex directed towards the grid.

HLIB also projected that listed power infrastructure players with access to capital and economies of scale would be well-positioned to capitalise on this multi-year u pcycle. Since the data centre investment wave gathered momentum in 2023, the power infrastructure market has seen a surge in available jobs. However, two years on, many smaller unlisted players are facing financial bottlenecks in securing new projects.

This is evidenced by the recent wave of fundraising activity among listed mechanical and electrical (M and E) contractors and cable manufacturers, where proceeds are earmarked mainly for working capital support (M and E) or capacity expansion (cable makers). On the customer front, TNB's move to require M and E contractors to procure high-voltage cables rather than be supplied by TNB further raises the financing bar.

It is believed that the next wave of power infrastructure jobs from both TNB and the private sector is likely to be increasingly concentrated among listed companies. Additionally, policy tailwinds, such as the government's cable import regulations and TNB's preference for local contractors, are expected to create barriers to entry for foreign competitors, further reinforcing the market position of domestic players. Consequently, the bank has maintained its 'overweight' call on the power infrastructure sector.