PETALING JAYA: Competition for the first two packages of the RM3.7bil Langat 2 Phase 2 water infrastructure project is expected to be intense, with Gamuda Bhd
and IJM Corp Bhd seen as strong contenders following the issuance of pre-qualification notices, CIMB Research says.
On June 9, 2026, Pengurusan Aset Air Bhd issued the pre-qualification tender notice for the two packages for Phase 2 of the Langat 2 project, which makes up part of the wider Pahang-Selangor integrated raw water transfer linking the 44.6km raw water transfer tunnel from the Semantan River in Pahang to the Langat 2 water treatment plant (WTP) in Hulu Langat, Selangor.
The first and larger package involves a WTP and reticulation system in Hulu Selangor, while the second package includes the construction, design, and commissioning reservoirs in Petaling and Bukit Serdang as well as a booster pump station and water towers in Sungai Besi.
Together with the Sungai Rasau Water Supply Scheme, the project is expected to add 2,260 megalitres per day to Selangor’s water supply capacity upon completion.
The pre-qualification exercise for the first two packages closes on July 9, 2026.
“While we expect a competitive bidding process, Gamuda and IJM stand out based on their track record in handling large-scale water infrastructure works,” CIMB Research said.
The research house highlighted several Gamuda-led projects including the Sungai Rasau Water Supply Scheme, Ulu Padas Water Supply Scheme, and the Northern Perak Water Supply Scheme, as well as IJM’s participation in the construction of the Pahang-Selangor raw water transfer tunnel and installation of large-diameter pipes.
It added that the project provides multi- year order opportunities for Malayan Cement Bhd, a company involved in the production, manufacturing, and trading of cement, clinker, ready-mixed concrete and other building materials.
CIMB Research maintained a “neutral” stance on the construction and materials sector.
The project comes at a time when activity in the construction sector stands at record levels.
According to BIMB Research, Malaysia’s construction work done in the first quarter of financial year 2026 (1Q26) reached a new high of RM46.5bil, marking a 8.5% year-on-year increase.
This was largely fuelled by private sector activity, with data centres (DC), industrial, and logistics developments as key growth drivers, it said.
“The DC investment cycle is generating a meaningful secondary wave of construction activity in supporting infrastructure –particularly electricity transmission and water,” the research house said.
The structural and durable nature of this secondary construction spend is also reinforced by the government confirming that all costs related to upgrading grid and water infrastructure for DCs will be fully borne by developers rather than utility consumers, it added.
Meanwhile, in terms of water utilities, BIMB Research said Ranhill Utilities Bhd’s stronger-than-expected third quarter ended March 31, 2026 earnings performance was primarily driven by exceptional operating leverage within its water segment.
Pre-tax profit in its water segment rose 35.4% quarter-on-quarter to RM78.9mil, contributing approximately 87% of total group pre-tax profit.
Despite this, the research house flags that rising fuel prices and narrowing electricity rebates could pose challenges to the water business.
It also notes that the Full Cost Recovery tariff framework exists to help water operators recover operating costs, fund capital expenditure, and earn reasonable but regulated returns.
“Periods of exceptionally strong profitability are unlikely to be sustained over the longer term as tariff settings are ultimately calibrated to balance operator viability with consumer affordability,” it said.
