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Focus Malaysia
7 days ago
- Business
- Focus Malaysia
Private sector, infrastructure projects to anchor construction growth in 2025
DATA from the Department of Statistics Malaysia showed the construction sector remained on a positive trajectory for the 12th consecutive quarter, registering an increase of +23.1% year-on-year (yoy) to RM42.9 bil of work done value in quarter one (Q1) of 2025. Out of the work done, 36.6% or equivalent to RM15.7 bil was in civil engineering, primarily in the construction of roads and railways (RM7.9 bil) and construction of utility projects (RM6 bil ) activities. The value of work done for nonresidential buildings and residential buildings amounted to RM12.3 bil (28.8%) and RM9.9 bil (23.0%), respectively. Meanwhile, special trade activities contributed RM5.0 bil (11.6%), mainly in sites preparation (RM1.3 bil); electrical installation (RM1.2 bil); and plumbing, heat, and air-conditioning installation (RM1.1 bil). Nearly 63.4% of completed works value was concentrated in Selangor, Johor, the Federal Territories and Sarawak, with Selangor recording the highest construction work done value at RM11.1 bil. As of May-25, a total of 5,387 projects have been awarded in 2025, with a total value of RM76.3 bil. This is slightly lower than the same period in 2024 where 7,822 projects were awarded, with a total value of RM91.6 bil. 'Overall, we see this as a positive development despite the headwinds suffered by the construction sector in 1Q25, attributed to delays in project rollouts within the pipeline and global trade tensions. We do not expect any surprises for 2Q25,' said MIDF Research. Across the board, construction companies encountered subpar conditions in 1Q2025, with some benefiting from robust progress in infrastructure and property projects, while others faced challenges due to project completions and regulatory delays. 'Our economics team has maintained their forecasted growth for the construction sector in 2025 at +12.8%,' said MIDF. With the lack or rather delayed rollout of mega pump-priming projects under Budget 2025, the construction sector is still expected to be supported by private sector jobs with a focus on industrial buildings such as logistics warehouses, data centres, and semiconductor foundries. This will be further backed by previously awarded infrastructure projects such as the East Coast Rail Link (ECRL), RTS Link and the recently reinstated five LRT3 stations. The government aims to generate RM78 bil worth of public-private partnership (PPP) investments across 17 key initiatives by CY30, according to the PPP Master Plan 2030. Other upcoming projects that could boost the sector include, the Penang LRT (value estimated to be >RM10.3 bil), Penang International Airport expansion; the RM6.1 bil Northern Coastal Highway in Sarawak; the RM5.6 bil Sabah-Sarawak Link Road, the rollout of the MRT3 project, and the potential renewal of the KL-SG High Speed Rail project amongst others. 'We maintain our positive view on the construction sector, supported by a favourable cost environment and steady project momentum,' said MIDF. Steel bar prices have continued to ease for the second consecutive month amid a decline in global production, while cement prices remain stable due to disciplined domestic production and raw material cost control. These dynamics help cushion contractors from margin pressures. While recent geopolitical developments such as the Liberation Day tariffs and the conflicts in the Middle East have introduced some volatility, MIDF see limited impact on the sector given its domestic focus and low direct exposure to U.S. and Middle East markets. Moreover, key inputs remain reasonably priced, and sector fundamentals are supported by healthy job flows, a strong pipeline of industrial and infrastructure projects, and strengthened data centre demand. Looking ahead, the second half of 2025 is expected to show a recovery in construction sector performance, driven by improved project execution momentum despite more challenging market conditions. —June 17, 2025 Main image: National Action Plan On Business And Human Rights
Malaysian Reserve
26-05-2025
- Business
- Malaysian Reserve
Inari Amertron faces near-term headwinds
INARI Amertron Bhd is facing near-term headwinds as the semiconductor support player is seen punching below market expectations. For the third quarter ended March 31, 2025 (3Q25), its net profit plunged 24.8% quarter-on-quarter (QoQ) to RM55.5 million on a revenue of RM308.3 million, down 11.3% compared to the same period. 'Long-term prospects remain intact with efforts to tap into advanced packaging markets, but near-term headwinds and volatile geopolitical trade dynamics justify a more conservative stance,' BIMB Securities Sdn Bhd said in a note released last week. It has a 'Hold' call on the company's counter with a 52-week target price (TP) of RM2.23. Inari Amertron has 12 'Buy', eight 'Hold' and two 'Sell' calls among the analysts tracked by Bloomberg, with a consensus TP of RM2.24. OSAT Provider The semiconductor company operates in the outsourced semiconductor assembly and test (OSAT) and electronics manufacturing (EM) segments. It is the largest semiconductor player in Malaysia and a key OSAT provider for Broadcom's rapidly thriving wireless division. In an exchange filing on May 20, Inari Amertron reported its net profit for the first nine months ended March 31, 2025 (9M25), fell 30.9% to RM169.6 million, on revenue of RM1.04 billion, which was down 11.3%. It said the decline in revenue was mainly due to comparatively lower product volume loading across all business segments and changes in the product mix. The lower profit was attributed to reduced volume loading, unfavourable foreign exchange (forex) movements and a start-up loss of RM15.7 million at its China subsidiary during the period. Excluding the losses from the China subsidiary, the profit decline would have been 27%. Commenting on the results, BIMB Securities said it has maintained its cautious stance, as volume recovery has yet to materialise amid continued softness in the smartphone and industrial segments, which still account for a significant portion of Inari Amertron's portfolio. While data communications are showing early signs of growth, the company's limited exposure to artificial intelligence (AI) and advanced packaging technologies restricts its ability to capitalise on selective tailwinds in the sector. Although Inari Amertron continues to scale its China operations and explore strategic partnerships, contributions from these initiatives remain negligible in the near term, it said. Kenanga Research Lowers Inari Amertron Outlook The counter was downgraded to 'Market Perform' from 'Outperform' by Kenanga Investment Bank Bhd (Kenanga Research), with a lower TP to RM2, down from RM2.39. The research house said Inari Amertron's 9M25 results came in below expectations, primarily due to weaker demand in its radio frequency (RF) and opto-electronics segments. 'Post-US Liberation Day, it is becoming evident to us that margin pressures are likely to persist amid ongoing forex volatility and uncertainties stemming from US-China tariff war. Incorporating a more cautious outlook, we trim FY25F/FY26F earnings forecasts by 8%/16%,' it said. On the company's outlook, Kenanga Research said Inari Amertron anticipates selective growth in the semiconductor industry, driven by the accelerating adoption of generative AI across various sectors. The group also expects robust performance from the data communications sector — which contributed approximately 14% of 9M25 revenue — while demand for smartphones (which made up 68% of sales) and other semiconductor products is likely to remain subdued. 'Margin pressures are expected to persist, stemming from forex volatility and ongoing US-China tariff negotiations, which continue to disrupt supply chains and inflate cost structures,' added the report. Meanwhile, Apex Securities Sdn Bhd has maintained its 'Buy' call on Inari Amertron but lowered its TP to RM2.94 from RM3.53 following an earnings revision. 'We expect RF volume to see some upticks in the 4Q25, supported by front-loading and rush buying of end-product smartphones during the 90-day trade truce window. However, the longer-term outlook remains clouded, with limited visibility for RF and automotive-related demand due to ongoing tariff uncertainties,' it said. Maybank Investment Bank Bhd (Maybank IB) has retained its 'Hold' call and TP of RM2, noting it was encouraged by Inari Amertron's management team's ability to manage cost efficiently and maintain operating margins despite a high fixed-cost base. CIMB Securities Sdn Bhd also retained its 'Buy' call with a TP of RM2. 'We believe the US tariff exemption for smartphones will help mitigate pricing pressures, thereby supporting stable RF volume loadings for Inari Amertron. 'At the same time, we remain cautiously optimistic that new programme ramp-ups will begin contributing meaningfully to revenue in FY26F.' The research house said potential catalysts for the stock include higher contribution from new programmes, a stronger-than-expected recovery smartphone demand, new customer acquisitions driven by trade diversion from North Asia, earnings-accretive acquisitions, favourable incentives from the Malaysian government through the implementation of the National Semiconductor Strategy and higher dividend payouts. Public Investment Bank Bhd (PublicInvest) has maintained its 'Outperform' call but lowered Inari Amertron's TP to RM2.30, down from RM2.46. Despite flattish growth in the smartphone segment and weaker momentum in the industrial segment, the report said Inari Amertron is expected to deliver strong growth in data communications segment. Inari Amertron closed at RM1.87 on May 21, valuing the company at RM7.09 billion. Its 52-week high/low was RM4.02/RM1.42 respectively. — TMR This article first appeared in The Malaysian Reserve weekly print edition
Daily Express
10-05-2025
- Business
- Daily Express
Construction sector hits RM42.9 billion
Published on: Saturday, May 10, 2025 Published on: Sat, May 10, 2025 By: Bernama Text Size: Mohd Uzir further explained that of the RM42.9 billion in work done, RM15.7 billion came from the civil engineering sub-sector, mainly driven by roads and railways (RM7.9 billion) and utility projects (RM6.0 billion). - Pic for illustration only. Kuala Lumpur: Malaysia's construction sector recorded a 16.6 per cent year-on-year (y-o-y) increase in the value of work done to RM42.9 billion in the first quarter of 2025 (1Q 2025), according to the Department of Statistics Malaysia (DOSM). In a statement, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the sector maintained its upward momentum, albeit at a more moderate pace compared to the 23.1 per cent growth registered in the previous quarter. 'The performance was mainly driven by continued expansion in the special trade activities and residential buildings sub-sectors, which posted double-digit growth of 35.5 per cent and 27.0 per cent, respectively. 'The non-residential buildings sub-sector showed an increase of 21.0 per cent, while the civil engineering sub-sector remained positive with marginal growth of 3.7 per cent,' he said. Mohd Uzir further explained that of the RM42.9 billion in work done, RM15.7 billion came from the civil engineering sub-sector, mainly driven by roads and railways (RM7.9 billion) and utility projects (RM6.0 billion). Meanwhile, the value of work done for non-residential buildings and residential buildings stood at RM12.3 billion (28.8 per cent) and RM9.9 billion (23.0 per cent), respectively. 'Special trade activities contributed RM5.0 billion (11.6 per cent), with major contributions from site preparation (RM1.3 billion), electrical installation (RM1.2 billion), and plumbing, heating, and air-conditioning installation (RM1.1 billion),' he said. Elaborating on the construction sector, Mohd Uzir said the private sector remained the main driver of growth this quarter, with an increase of 23.7 per cent, supported by special trade activities (40.9 per cent) and residential buildings (26.5 per cent). 'The value of work done by the private sector amounted to RM27.0 billion, or 62.9 per cent of the total construction work done value, he noted. In contrast, Mohd Uzir said the public sector contributed RM15.9 billion, or 37.1 per cent of the total work done, with a growth of 6.3 per cent (compared to 8.8 per cent in Q4 2024). 'The growth was driven by the residential buildings (34.8 per cent) and special trade activities (24.5 per cent) sub-sectors, contributing RM0.7 billion and RM1.5 billion, respectively,' he said. On a state-by-state basis, he added that nearly two-thirds of construction activity was concentrated in Selangor, Johor, Wilayah Persekutuan (Kuala Lumpur, Putrajaya, and Labuan), and Sarawak. Selangor topped the list with RM11.1 billion (25.9 per cent) in construction work, followed by Johor with RM7.7 billion (18.0 per cent), Wilayah Persekutuan at RM4.5 billion (10.6 per cent), and Sarawak with RM3.9 billion (9.0 per cent). * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
