PETALING JAYA: The construction sector is set for stronger earnings and order book momentum in the second half of the year as major infrastructure projects gain traction and data centre investments continue to expand. Contractors with sizeable backlogs and strong execution capabilities are likely to remain best placed as progress billings accelerate and new jobs replenish order books.
BIMB Research maintains an “overweight” stance on the sector following a generally resilient reporting season, with Gamuda Bhd
, Sunway Construction Group Bhd (SunCon) and Kerjaya Prospek Group Bhd delivering earnings broadly within expectations, while Econpile Holdings Bhd and Gabungan AQRS Bhd came in above forecasts.
“Data centres remain the sector’s clearest structural growth catalyst, although exposure has broadened beyond SunCon,” BIMB Research said.
SunCon remains the most concentrated data centre play, with a record RM10.5bil order book, of which about RM7.4bil is linked to data centre-related jobs. Its active data centre tender pipeline also exceeds 700MW.
Gamuda, meanwhile, has lifted its construction order book to about RM59.6bil following the RM3.57bil Port Dickson hyperscale data centre awards. Its outstanding data centre exposure is estimated at RM9.4bil, or about 16% of its total order book.
BIMB Research said the sector is increasingly shifting from an earnings recovery story towards sustained order replenishment and execution.
“With several contractors now carrying record or near-record backlogs, the sector’s focus is shifting from earnings recovery towards sustained replenishment and execution,” it said.
TA Research also maintains an “overweight” stance, citing robust outstanding order books, a steady project rollout pipeline and improving earnings visibility.
It expects contractors under its coverage to post stronger earnings in the second half, supported by healthy backlogs and accelerating progress billings as projects move into steeper phases of their execution cycle.
“The construction sector outlook for the second half of 2026 is expected to remain constructive, underpinned by improving job visibility across both public and private sector pipelines,” TA Research said.
The research house expects large-scale infrastructure awards to accelerate, with the Penang LRT Segment 2 package, estimated at RM4bil to RM5bil, and Johor e-ART, estimated at RM7bil to RM8bil, among the key opportunities.
Private construction prospects are also expected to improve alongside the domestic property market, while the Johor-Singapore Special Economic Zone, semiconductor investments and data centre development should support demand for residential and commercial projects.
TA Research expects its top picks, Gamuda and Kerjaya Prospek, to benefit from this backdrop.
Gamuda’s record RM59.6bil unbilled order book provides strong earnings visibility, while Kerjaya Prospek has additional growth opportunities in industrial property construction, data centres and Tenaga Nasional Bhd grid-related mechanical and electrical works.
BIMB Research favours Gamuda and SunCon, citing record order books, diversified data centre exposure and strong multi-year earnings visibility.
It sees Gamuda entering a sharper earnings conversion phase as its sizeable early-stage backlog progresses into peak execution, while SunCon continues to deliver strong construction margins.
Meanwhile, one analyst told StarBiz that order book replenishment has become increasingly important for sustaining the sector’s growth momentum.
“At the same time, disciplined cost management and timely project execution will remain key differentiators as contractors navigate a more competitive operating environment,” he added.
