KUALA LUMPUR, May 24 (Bernama) -- RHB Investment Bank Bhd has maintained an ‘Overweight’ stance on the construction and engineering sector on the back of sizeable upcoming new data centres projects.
It noted that Sime Darby Property Bhd has partnered Pearl Computing Malaysia Sdn Bhd to build and lease a data centre and associated structures at Elmina Business Park in Selangor.
Pearl Computing is a subsidiary of Raiden APAC, which is part of a United States-based multinational technology corporation.
“This data centre project is set to break ground in the second quarter of 2024 (2Q 2024) with a targeted completion in 2026. We do not discount the possibility of locally listed contractors participating in this project,” the research house said in a note today.
On the potential capacity and cost to build the data centre, RHB Investment benchmarked it against Yondr Group’s data centre campus, now in the early construction phase.
The Yondr data centre, located on 29.46 hectares (ha) (72.8 acres) in Johor’s Sedenak Tech Park, will offer a total capacity of 200 Megawatt (MW) on completion. This translates into 0.40 ha (1 acre) potentially catering for 2.7MW of data centre capacity, it said.
“With the Elmina data centre on 19.83 ha (49 acres), we estimate its total capacity to be at around 130 MW by applying the acre to MW of data centre capacity assumption above.
“Using the low-end range of a RM20 million budget per MW to build a data centre, we calculate this project may cost roughly RM2.6 billion,” the research house said.
Sime Darby Property will likely tender out the construction contract, and few names could be identified to benefit from it, RHB Investment said.
Contractors with such experience include Sunway Construction Group Bhd and Gamuda Bhd.
Sunway Construction Group has a data centre job worth about RM750 million in Selangor and another RM1 billion in Johor.
Gamuda has clinched two such jobs worth RM500 million in total from AIMS Group, it said.
“Additionally, we believe HSS Engineers Bhd could also stand a chance to secure project management contracts.
“In 2023, HSS was awarded a RM8.8 million project management services contract for a data centre in Sedenak Tech Park by Yellowwood Properties.
“It also landed a RM8.9 million contract during this period for professional engineering design and consultation services for a data centre developed by Infinaxis Data Centre in Cyberjaya,” it said.
The research house acknowledged risks in the form of competition stemming from foreign-based contractors with track records in building data centres in Malaysia, such as Leighton Asia, appointed as the contractor for data centres likely to be located in Cyberjaya and Johor.
RHB Investment opined that contractors who can accommodate short turnaround times will benefit.
Gamuda, for example, managed to complete the 8MW capacity AIMS Cyberjaya Block 2 DC in nine months using its next-generation digital industrial building system solution, it said.
“The latest Elmina data centre reaffirms Malaysia’s attractiveness as a hotspot for this type of properties, with the country’s data centre market expected to reach US$4 billion by 2027 versus US$1.8 billion in 2023,” the research house said, quoting data market intelligence Arizton.
“A key risk would be the influx of contractors into data centre construction, which may compress margins,” it added.
-- BERNAMA
BERNAMA provides up-to-date authentic and comprehensive news and information which are disseminated via BERNAMA Wires; www.bernama.com; BERNAMA TV on Astro 502, unifi TV 631 and MYTV 121 channels and BERNAMA Radio on FM93.9 (Klang Valley), FM107.5 (Johor Bahru), FM107.9 (Kota Kinabalu) and FM100.9 (Kuching) frequencies.
Follow us on social media :
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter : @bernama.com, @BernamaTV, @bernamaradio
Instagram : @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TikTok : @bernamaofficial
