Construction sector set for sustained momentum in 2026, says Maybank Research

KUCHING (Jan 12): Malaysia’s construction sector is expected to remain resilient in 2026, underpinned by five themes, the Johor-Singapore Special Economic Zone (JS-SEZ), industrial parks, continued data centre (DC) expansion, renewable energy (RE) assets and water assets.

According to analysts from Maybank Investment Bank Bhd (Maybank Research), sector growth in 2026 will be driven by actualisation of approved private investments translating into construction activities, especially in Johor and the JS-SEZ.

The 13th Malaysia Plan’s focus on high value manufacturing is also expected to be translated into construction activities of industrial parks and enabling infrastructures.

Finally sustained DC demand is expected to bring about a second wave of DC jobs and subcontracting of mechanical, electrical and plumbing (MEP) jobs from the first wave. The boost of DCs are also expected to drive rapid development of RE assets to power these DC as well as water assets such as water treatment plants (WTPs) to cool them.

Note that Malaysia’s total DC capacity has more than doubled to 3.8GW by 3Q25, with 49 facilities completed, under construction or at the electricity supply agreement stage.

Meanwhile, the rapid rollout of solar and battery storage projects under programmes such as large-scale soalr 5 (LSS5), LSS5+ and the upcoming LSS6 is expected to generate around RM18 to RM20 billion in job opportunities between 2025 and 2027.

Based off these themes, Maybank Research opines that Gamuda Bhd (Gamuda) is best positioned to capitalised on these themes as they reckon Gamuda is strong in 3 of the 5 aforementioned themes, namely in DCs, RE assets, and water assets.

“We also tip Gamuda to bag the Ulu Padas water supply scheme worth an estimated RM4 billion, Penang Mutiara LRT line systems works worth RM3 billion and Penang-Perak water transfer worth RM5 billion.

“With or without the Klang Valley Mass Rapid Transit Line 3, Gamuda remains our top pick in the construction sector,” said the analyst who maintains a ‘buy’ call on Gamuda.

The analyst added that Sunway Construction Group Bhd (Suncon) could also be a standout in 2026 as they also excel in 3 out of the 5 aforementioned themes, namely the JS-SEZ, DCs and RE assets.

“We also tip Suncon to bag jobs from a related company to construct 3 hospitals which will be worth over RM1 billion in total,” they added.

That said, Maybank Research maintains a ‘hold’ call on Suncon for now as they await more consistent job wins.

Looking eastward, Maybank Research guides that they also maintain a ‘buy’ call on Cahaya Mata Sarawak Bhd (CMS) despite CMS not being strong in any of the five aforementioned themes and the 2026 development expenditure for Sarawak being largely unchanged at RM6 billion.

The analyst guided that they are optimistic its phosphate plant will moderate losses and even generate profits going forward after electricity was restored to it on 9 Sep 2025.

“All in all, we forecast its core net profit (CNP) to grow 40 per cent from RM142 million in 2024 to RM199 mullion in 2027,” they opined.