MIDF Research said utilities remained a constraint, with options like desalination and grey water under consideration.
PETALING JAYA: There are about 40 to 50 data centre projects in the pipeline in Johor, with 20 of them already approved.
Each project may take 12 to 18 months to complete, according to MIDF Research, which recently met with officials from the Johor Economic Planning Division and Iskandar Regional Development Authority.
However, timelines may be extended or there may be need for redesigns as data centre projects must comply with a new policy whereby buyers are required to prove that there is water and electricity access before obtaining land approval.
In a note, MIDF Research also said utilities remained a constraint, with options like desalination and grey water under consideration.
“Our outlook for data centre expansion remains positive, as it continues to support capital goods imports while stimulating growth in the construction sector.
“Major construction firms, notably Gamuda Bhd
, IJM Corp Bhd and Sunway Construction Group Bhd, are capitalising on the upward trend of data centres in Malaysia.”
Meanwhile, the research house noted that the Johor property sector remains supported by key catalysts like the Johor-Singapore Special Economic Zone (JS-SEZ) and the Johor Baru–Singapore Rapid Transit System.
Property overhang is easing, with residential overhang in Johor dropping to 2,964 units in the fourth quarter of 2024.
On JS-SEZ, MIDF Research cautioned that talent retention remained a challenge, with Singapore salaries about 3.5 times higher compared with Malaysia.
The focus is on creating better opportunities to retain or attract talent. To address the tight supply, efforts are underway to upskill the local workforce via the Johor State Talent Development Council.
During its visit to Johor, MIDF Research also met with several key players in the commodity space.
One of them was Johor Plantations Group Bhd (JPG), which operates palm oil plantations across nearly 60,000ha in Johor.
“Management indicated that JPG is likely to register mid-single-digit fresh fruit bunch output growth for the financial year of 2025 (FY25), with output projected to range between 900,000 and one million tonnes.
“With March local average crude palm oil price ending at RM4,740 per tonne, a 12.4% year-on-year (y-o-y) increase, reflecting continuation of supply risks at the moment, we anticipate JPG earnings performance to sustain positive momentum throughout FY25.”
On sugar producer MSM Malaysia Holdings Bhd, MIDF Research said the management expects the demand for the wholesale and industry subsegment to continue expanding in tandem with a local average population growth of 2% to 3% per annum.
“The company plans to significantly boost exports, targeting approximately 30% y-o-y growth to 360,000 tonnes, with a focus on markets such as Indonesia, Vietnam, China, and the broader Asia-Pacific region.
“For China, MSM aims to ramp up sales of its liquid products to the country, which offer profit margins that are 30% higher than other segments, despite currently contributing less than 10% of total revenue.
“This year will serve as a dry run for these products, with a targeted sales volume of 37,000 tonnes, allowing the clients to assess MSM readiness before committing to bulk purchase agreements,” it added.
MIDF Research also mentioned Guan Chong Bhd (GCB) and the impact of the United States tariffs on the profits from US-bound sales.
“This directly affects GCB given that itsr two plants based in these two countries (Malaysia and Côte d’Ivoire, West Africa) are the main supplier to its US market.”
Based on FY24 total group sales, GCB has 28% butter, 15% liquor, 9% cake and 3% powder exposure to the US market.
Butter and liquor, which are higher margin products, face the highest US tariffs and exposure, directly pressuring GCB’s profitability.
