RHB IB, which made a recent visit to Johor and was briefed by Johor state executive council member Lee Ting Han, reaffirmed the promising outlook for the state’s construction sector.
Malaysia’s portion of the RTS Link project has reached 41% completion as of July, with a targeted completion date end of 2026. SunCon is the key contractor responsible for land viaducts for this project.
SunCon received a further boost when Malaysia’s Mass Rapid Transit (MRT) recently awarded it the RM604.9 million contract for the construction of stations and structures on the cross-border RTS Link between Johor Bahru, Malaysia and Woodlands, Singapore.
The contract is for the construction and completion of Package 1B, covering advance works for stations and viaducts, and Package 5, covering terrestrial viaducts and ancillary structures which is expected to be completed in the second quarter of 2025.
However, RHB IB said packages to build the Bukit Chagar RTS station and the Immigration, Customs and Quarantine Complex (ICQC) are yet to be awarded after the recent call for tenders took place between May and August.
SunCon has submitted tenders for Packages 2A and 2B for the ICQC, estimated to be worth RM400–700 million.
“We view SunCon as the frontrunner for the packages as it was already involved in some piling works for the ICQC,” it added.
Meanwhile, RHB IB said Gadang Holdings has secured two contracts totalling RM680 million for the RTS Link project, involving two packages, Package 4 (Bukit Chagar station and the operation control centre) and Package 6 for depot and power supply system,” the research house said.
Data centre prospects
RHB IB also forecasted that data centre development will continue to see growth over the next two years. Sedenak Technology Park Phase 1 in Johor has attracted major hyperscale data centre investors including Yondr, Keppel Data Centres and Bridge Data Centres.
“Future entries of data centre investors will be made easier via Tenaga Nasional’s Green Lane Pathway which offers fast-tracked electricity supply, where data centres will be connected three times faster than normal, reducing the implementation period from 36-48 months to just 12 months,” it added.
The research house said the growth in data centres may benefit contractors with data centre exposure such as SunCon and Gamuda.
Meanwhile, RHB IB is maintaining its “overweight” call on the construction sector.
As at 3.50pm, SunCon’s shares rose five sen or 2.7% to RM1.93, valuing the group at RM2.5 billion. Gamuda’s share price was three sen or 0.7% higher at RM4.40, giving it a market capitalisation of RM11.86 billion.