KUALA LUMPUR, July 12 — Hong Leong Investment Bank Bhd (HLIB) expects positive sentiment for the construction sector coming from the Johor-Singapore Special Economic Zone (JS-SEZ) finalisation and Budget 2025.

In a research note today, HLIB also anticipates the rollout of big ticket infrastructure contracts and has retained the Overweight sector call for the second half of 2024 (2H 2024).

"This should lead to acceleration of contract awards into the 2H 2024 possibly leading to the second highest contract awards tally of more than RM40 billion,” it said.

Further to this, HLIB expects sustaining private sector flows to be led by data centres (DCs) where the pipeline continues to be strong.

"In the past year, the pipeline has been further bolstered by Johor’s emergence as the fastest growing DC market in the Southeast Asia region.

"Several noteworthy investments are Chindata Group (Bridge Data Centres) RM15 billion, Microsoft (RM10.5 billion), Google (RM9.4 billion), EdgeConneX (RM9.3 billion) and AWS (RM25.5 billion),” it said.

HLIB said 2H 2024 could finally see sizeable public infrastructure projects coming to the fore. Several projects to be rolled out in the near term include the Penang LRT (RM10 billon), Sabah-Sarawak Link Road Phase 2 (RM7.4 billion), Northern Coastal Sarawak road, Sabah hydro and water, Penang airport expansion and critical flood mitigation projects.

Meanwhile, potential developments on prospective projects like the KL-Singapore high speed rail and the Johor Automated Rapid Transit could spur stronger sector sentiment.

The top picks for this sector are Gamuda Bhd with target price (TP) of RM9.08 and Sunway Construction Group Bhd with a TP of RM5.60. — Bernama