The growth momentum in the construction sector remains strong.

(Kuala Lumpur, 3rd news) With the upcoming 2025 budget and the final countdown phase of the Johor Special Economic Zone (JSSEZ), analysts expect this to boost the construction sector, while also anticipating more large-scale public infrastructure projects to be unveiled in the last quarter.

Analysts at Fenglong Investment Bank pointed out in a report today that the total domestic construction contracts in the third quarter of 2024 reached a level of 11.2 billion ringgit, an increase of 2.90 times year-on-year, but a 19% decrease month-on-month.

For the first 9 months, domestic contracts awarded amounted to 31.9 billion ringgit.

Currently, key infrastructure projects awaiting delivery include the second phase of the Sarawak-Sabah Link Road (SSLR 2), the Kuching Urban Transportation System (KUTS), the first phase B of the Sabah Pan-Borneo Highway (PBH SABAH 1B), and flood control projects.

Analysts suggest that, based on current observations, the mentioned projects are also expected to continue awarding contracts in the coming quarter.

That being said, it is evident that contracts related to data center projects have seen a significant decline, dropping from 4.40 billion in the second quarter to 0.9 billion9 million in the third quarter.

Analysts also point out that there has been a slight decline in commercial or residential project contracts on a quarter-on-quarter basis. However, this was expected, mainly due to the faster contract pace in the second quarter.

"Nevertheless, we still believe that, according to compiled data by Fong Long Investment Bank, the value of construction contracts in 2024 could easily exceed 40 billion ringgit, and even potentially surpass 50 billion ringgit."

Looking ahead to the end of 2024, analysts anticipate the continuous launch of more large-scale infrastructure projects, with the SSLR 2 and Sabah Highway 1B phases being successively rolled out, confirming this.

Analysts highlight the importance of paying attention to projects such as Sabah Hydroelectric Power, Penang Light Rapid Transit (LRT), and the Penang Airport.

In addition, although the third-quarter datacenter contracts have temporarily eased, it is expected that contractors will begin to receive contracts in the last quarter.

In addition to the contract improvements driving work, analysts are also pleased to see the positive impact on market sentiment from the Johor Light Rapid Transit (LRT) and the upcoming Kuala Lumpur-Singapore High-Speed Rail (HSR).

Taking the above into consideration, analysts continue to maintain a "shareholding" rating. At the same time, they also anticipate a surge in infrastructure contracts for the whole year, surpassing the highest level since 2016.