RHB Investment Bank Bhd (RHB Research) has maintained its OVERWEIGHT call on the construction sector, with a focus on Johor-based companies such as Sunway Construction Group Bhd (SCGB) and IJM Corporation Bhd (IJM). The analysts cited the signing of the Johor-Singapore Special Economic Zone (JS-SEZ) agreement as a pivotal development for the sector, anticipating significant opportunities in infrastructure and industrial projects over the next decade.
The JS-SEZ aims to attract 100 projects within its first ten years, targeting industries like aerospace, electronics, and tourism. Malaysia is set to establish an infrastructure support fund, while Singapore will provide funding to assist its companies in expanding within the SEZ. This partnership is expected to spur construction activity across nine flagship areas, including Johor Bahru City Centre, Iskandar Puteri, and the Pengerang Integrated Petroleum Complex.
Contractors are poised to benefit from the enhanced infrastructure requirements, particularly in road connectivity. Kimlun Corporation Bhd has already been involved in upgrading the Senai-Desaru Expressway, which aligns with the broader objectives of the JS-SEZ. The industrial construction segment is also likely to thrive, driven by the demand for logistics hubs, factories, and semiconductor facilities. Data from the National Property Information Centre (NAPIC) shows a decline in overhang for industrial buildings, signalling a healthy demand environment.
SCGB and IJM are well-positioned to capitalise on these opportunities. SCGB has secured RM3.9 billion worth of data centre projects in Johor and is strategically poised to bid for additional industrial building contracts. IJM, which has a foothold in data centres in Iskandar Puteri and Gelang Patah, brings expertise from its semiconductor facility projects in Penang and logistics hubs in Selangor.
RHB analysts also highlighted the potential for improved public transportation systems in Johor. While there has been no confirmation of a Light Rail Transit (LRT) or Autonomous Rapid Transit System, the integration of these systems with the Johor Bahru-Singapore Rapid Transit System (RTS) Link could enhance mobility and support freer movement of people, a core objective of the JS-SEZ. Both SCGB and IJM have been involved in the RTS Link project and are seen as strong contenders for future tenders.
One such tender involves MRT Corp's plans for a multi-storey park-and-ride facility and mixed-use development at Bukit Chagar. IJM is reportedly exploring this opportunity, while Sunway Bhd may also be eyeing the project. The Johor Bahru City Centre, a flagship zone of the JS-SEZ, is expected to play a central role in these developments.
