The Malaysia market just can’t seem to get enough of data centres.
After personally witnessing the data centre craze in Singapore a few years back – until things eventually normalised, it gives me a strange sense of Déjà vu. Why are we getting excited over something that feels like overnight aged rice?
That said, I acknowledge that data centres are in their nascent phase in Malaysia, and still warrant a closer look at some of the companies that could be riding on this tailwind.
Here are 7 companies that have ventured, or are venturing, into the data centre business and could stand to benefit greatly from the increasing number of projects.
1. Telekom Malaysia Berhad (KLSE: TM)
The Malaysian equivalent of Singtel, albeit without the mobile network and data spectrum subscription business model. TM used to be a household name during my younger days for fixed lines and internet services.
Today, it finds itself as one of the formidable players within the Malaysia data centre scene. With most of of its data centres situated in prime Klang Valley and expanding into Johor, TM has firmly established itself in key vital states in Malaysia that would offer critical co-location and managed hosting services.
With a P/E ratio of just 14x, it seems the data centre catalyst and its growth prospect have yet to be fully baked in.
2. YTL Power International Berhad (KLSE: YTLPOWR)
Certainly one of the mouthpiece and most talked-about Malaysian stock, albeit the 40+% dip from its all-time-high.
Known mostly for its energy generation and distribution business, where it generates around 30% of Singapore’s electricity needs, YTLPOWR has also been in the news, famously after the MD was photographed with the Malaysian Premier and Jensen Huang, CEO of NVIDIA Corp (NASDAQ: NVDA).
YTLPOWR’s data centre foray into Johor will be a big one. Its YTL Johor Data Center park stands out as the first and largest renewable energy-integrated data centre park in Malaysia.
With an inherent catalyst and tailwind to ride on, and only a P/E ratio of 10x, will we be seeing a re-rating for this to-be data centre player?
3. Mah Sing Group Berhad (KLSE: MAHSING)
The Malaysian property and construction sectors are also catching a lift from the data centre mania. Who would have fathom that the AI mania sweeping through the chips and semiconductor industries could also buoy the share prices of the Malaysian construction players?
Mah Sing is one of the beneficiaries. It is one of the key construction players heavily involved in the construction and setting up of properties fitted for data centres. Its maiden entry into the data centre sector is the launch of Mah Sing DC Hub @ Southville City, with its first partner Bridge Data Centres (BDC), a company primarily owned by Bain Capital.
According to reports, Mah Sing’s maiden venture into data centres could see this initiative contributing an additional RM 60 mil to its top line for FY2026. If more and more projects are clinched, we could be seeing more upside in the present rally.
4. Gamuda Berhad (KLSE: GAMUDA)
With all the hype surrounding data centres these days, another fellow property developer is also on the bandwagon. Gamuda Engineering Sdn Bhd, the subsidiary of Gamuda Berhad, has also joined the foray.
Gamuda Engineering’s order book for data centres stands at RM 500mil with the projects from AIMS Group to build the latter’s Block 2 and 3. AIMS Group is one of the earliest pioneers in the Malaysian data centre scenes.
Having a well-established client like AIMS Group reply on Gamuda’s construction expertise reaffirms the company’s has the capability and know-how to deliver these new projects. And that would surely serves as a testimony to attract budding data centre operators.
With a trailing P/E ratio of 29x, Gamuda trades way above its 5-year mean P/E of 17.5x. However, if the data centre prospect persists for the next 5 years, this could yet be just the early phase of a long bull rally.
5. Sunway Construction Group Bhd (KLSE: SUNCON)
Sunway Construction Group Berhad, or more commonly known as SUNCON, is also a stock to take a deeper look, with its strong ties to the data centre catalyst.
Just earlier this year, the company bagged a RM 747.8mil job to build data centre in Selangor for a US multinational corporation. And just last month, it was awarded yet another contract, this time south in the Johor state, worth RM 374mil.
The frequency of the companies is bagging new data centre deals is not a coincidence – it has a strong reputation in the construction sector, with successful and well maintained townships and projects.
Valuation wise, SUNCON now trades at a whopping trailing P/E ratio of 34x, while its 5-year mean P/E is just 23x. That said, if it is a growth stock due to its consistent ability to bag data centre deals, it should be valued as one.
6. Powerwell Holdings Berhad (KLSE: PWRWELL)
Energy and efficient transferring of it, is crucial in the data centre world. That is why electrical solutions provider Powerwell Holdings (PHB) is also riding on the tailwind. The company’s services will be crucial in delivering and commissioning electrical low-voltage boards for the upcoming data centre influx in Malaysia.
The company has already gotten its first data centre project back in August 2024. It stands out as one of the few companies in Malaysia that specialises in the switchboard and electrical engineering (E&E) solutions.
On top of data centre, PHB also finds itself dipping into other key project sectors, namely the renewable energy, essential infrastructure projects like MRT, LRT, and the semiconductor industries.
Even though revenue has been growing in leaps and bounds, the company is still in the red. Perhaps it could be anticipating a turnaround with the current data centre mania?
7. Jati Tinggi Group Berhad (KLSE: JTGROUP)
Jati Tinggi, one of Malaysia’s leading engineering solutions provider, specialises in underground and overhead electricity distribution, transmission and also underground fibre optic cabling systems for mobile networks.
Just as data connection is crucial, power transmission is equally indispensable to ensure that the data centre operations are uninterrupted. This is where a subsurface engineering company finds itself as an unexpected beneficiary of the data centre catalyst.
The company’s status as a listed company is touching 1-year, having just IPO-ed in December 2024. In just under a year, shares of JTGROUP have climbed an impressive 40%.
While it is not the only subsurface engineering cabling company, it would surely be a key player in this essential sector.
At a P/E ratio of 12x, perhaps this could be an undiscovered gem that the public might not have laid eyes and attention on?
My Verdict
The data centre catalyst seems to mark yet another chapter in the thematic and changing Malaysian investing world – we sung high praises to the end stream semiconductor players during the silicon rush, went frenzy on glove stocks during the COVID lockdowns, the data centre story now appears to be the latest frenzy captivating investors.
Having read through this particular chapter from the Singapore arc, and looking at how data centre businesses around the world are faring, I would admit that there are still legs to run. However, we could be at the tail end run the rally where P/E ratios begin to normalise, while Malaysians who just focus on the Malaysian markets might not be looking at the overall big picture.
Not to say that the data centre theme is un-investable. But seeing that most of the companies mentioned are having contractual relationship within this sector, one should always ask are they in for the short sprint or for the long run?
Definitely legs to run for the short sprint, but if data centres become too concentrated, will we be seeing a moratorium initiative, similar to that of Singapore’s in 2019, potentially triggering a sell-off in the shares of the companies mentioned?
Food for thought!
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