Builders expected to gain from mega projects

PETALING JAYA: Construction companies will be heading into 2026 by focusing on enhancing efficiency and resilience, while cautiously exploring strategic ventures and new opportunities that offer sustainable returns.

Gamuda Bhd group chief financial officer Soo Kok Wong said the group will continue to strengthen financial resilience and deliver long-term value, as it advances into its next phase of expansion across high-growth and future-aligned sectors.

“Over the past five years, Gamuda has evolved from a leading domestic player into a diversified regional group with a stronger balance sheet, broader earnings base and greater resilience.

“The expansion into targeted high-growth regional markets has established a solid financial foundation for the next phase of growth, anchored on infrastructure, renewable energy and digital opportunities,” he said in the company’s annual report.

According to Soo, Gamuda will be entering its financial year 2026 (FY26) with a record-high order book and robust liquidity, making it well-positioned to translate scale into sustained earnings growth.

For its first quarter ended Oct 31, 2025 (1Q26), net profit rose 5% to RM215.13mil from RM205.39mil in the previous corresponding period, primarily driven by robust contributions from domestic construction projects and the successful execution of quick turnaround projects in Vietnam.

Revenue was lower at RM3.84bil compared with RM4.14bil a year earlier.

As at 1Q26, the group has a construction order book balance of RM37bil and unbilled property sales of RM8bil.

Gamuda announced earlier this month that it secured close to RM11bil in projects in Australia.

RHB Research, in a recent report, said the company is potentially looking at a target order book level of between RM50bil and RM55bil by the end of 2026.

It added that with the order book near RM46bil at the end of 2025 and assuming an annual burn rate of RM15bil, Gamuda would need to replenish RM20bil to RM25bil worth of new jobs in 2026 to hit the target.

“We view this to be achievable, as Gamuda is pursuing tenders totalling up to RM50bil (around RM10bil domestically, RM30bil from Australia and RM10bil from both Singapore and Taiwan),” it said.

Meanwhile, FBG Holdings Bhd group executive chairman Tan Sri Chan Kong Choy said the group remains anchored by sound business fundamentals and disciplined governance.

“We continue to assess risks and opportunities with a clear focus on aligning our efforts with the group’s long-term strategy and vision for sustainable value creation.

“Our core businesses remain the foundation of our performance, and we are committed to enhancing efficiency and resilience while cautiously exploring new opportunities that offer sustainable returns,” he said in theFBG’s annual report.

Amid an increasingly complex operating environment, Chan said FBG will continue to adopt a prudent approach, remaining responsive to market dynamics and focused on preserving financial strength.

“Looking ahead, while we maintain a measured optimism, we acknowledge the uncertainties that lie ahead – from evolving market conditions to geopolitical and economic headwinds.

“FBG will continue to take a prudent and disciplined approach as we work towards delivering sustainable value and protecting the interests of all stakeholders.”

Ireka Corp Bhd chairman Tan Sri Mohd Ismail Che Rus said the group continues to actively explore and pursue strategic ventures that align with its long-term objectives of sustainable growth, innovation and market diversification.

“Looking into the future, the outlook for the property and construction sector remains promising, supported by national development priorities and evolving market needs.

“Malaysia’s Budget 2026 presents a promising landscape for the property and construction sector, with targeted initiatives aimed at enhancing housing accessibility, urban renewal and infrastructure development.”

Of note, Mohd Ismail said the introduction of the 10% special tax deduction (capped at RM10mil) for converting commercial buildings into residential units opens new avenues for urban regeneration.

“These measures, coupled with infrastructure spending and incentives for sustainable building practices, position the group to seize emerging opportunities and deliver long-term value to our stakeholders through responsible and innovative property development,” he said.

Commenting on the outlook of the construction sector, Maybank Investment Bank Research (Maybank IB) said it expects the segment to continue benefitting from mega projects, data centres (DCs), renewable energy assets and water assets.

“In 2026, we expect the award of a few mega projects like the Ulu Padas water supply scheme (RM4bil) after the recently concluded Sabah state elections, Penang Mutiara LRT line systems works (RM3bil), Penang-Perak water transfer (RM5bil) and Penang Mutiara LRT channel crossing (RM5bil to RM8bil).

“Tuning our focus on DCs, we expect job wins from this sub-segment to remain abundant.”

Citing Tenaga Nasional Bhd, Maybank IB said there are eight electricity supply agreements signed for 1,100MW of DC capacity.

“Assuming RM20mil per MW to construct, we gather that the DC sub-segment will avail around RM20bil of potential job wins going forward.

“Among projects mentioned in Budget 2026 are the Pan Borneo Sabah highway (RM1.7bil), Trans Borneo Highway and a sovereign artificial intelligence cloud centre (RM2bil).”

As the proliferation of DCs take hold, Maybank IB believes that demand for renewable energy assets to power them and water assets to cool them will proliferate as well.

In terms of potential risks to the sector, Maybank IB said a shortfall in order book replenishment would hamper future earnings momentum.

It said a surge in construction material, fuel and labour costs would also cut into margins for jobs already secured.

MBSB Research said it forecasts a 9.5% growth for the construction sector in 2026, which is a decline from the 12.2% growth in 2025, having come off from a high base.

Furthermore, it noted that the influx of DCs into Malaysia has been a boon for the construction sector.

“We continue to expect it to remain a key growth engine for the sector in 2026, as demand remains resilient.”

MBSB Research said major construction firms, notably Gamuda, IJM Corp Bhd and Sunway Construction Group Bhd, continue to capitalise on the upward trajectory of DCs in Malaysia.

“Their capabilities in digital infrastructure and Industrialised Building Systems (IBS) have enabled them to secure significant DC projects, particularly from hyperscale clients with demanding timelines.

“Channel checks with contractors revealed that they are still actively tendering for DC jobs and that the pipeline is still healthy.”

The research house also said the construction sector will be boosted by multi-sector infrastructure and development catalysts.

The 13th Malaysia Plan sets out a substantial multi-year pipeline anchored by a projected RM430bil federal development allocation (RM86bil per year average).

MBSB Research said this would be further complemented by RM120bil in government-linked investment companies funding and RM61bil in public-private partnerships and private capital, with public investment projected to grow by about 3.6% per annum and to average roughly RM112.9bil per year.

“Key priorities include the expansion of public transport infrastructure, with major rail projects such as LRT3 in the Klang Valley, the Rapid Transit System linking Johor to Singapore, the East Coast Rail Line (ECRL) and the Penang Mutiara Line.

“Together with feasibility studies for the TransBorneo Railway in Sabah and Sarawak, this positions rail as a core mobility strategy for both Peninsular Malaysia and Sabah and Sarawak.”

MBSB Research said this is also supported by accelerated transit-oriented development initiatives across Kuala Lumpur, Selangor, Negri Sembilan, Johor and Penang, as well as along the ECRL corridor, which are expected to stimulate demand for mixed-use developments and to fast-track housing delivery through IBS and Green Building Index compliance.