KUALA LUMPUR (June 14): The buzz surrounding data centres and artificial intelligence (AI) continues to reverberate through Malaysia’s capital market, as companies in the construction, technology, and industrial products and services sectors emerge as top gainers of the week on Bursa Malaysia.
Bursa Malaysia’s Construction Index climbed as much as 6.1% over the past five trading days, during which it charted a new six-year high at 267.67 points on Thursday. The Technology Index also climbed 5.6% over the same period and touched a two-year high on Thursday at 80.63 points.
Meanwhile, the Industrial Products and Services Index surged 1.4% over the past week and posted a two-year high on Thursday at 200.87 points.
The impact of the data centre craze is most significant for companies valued between RM2 billion and RM15 billion.
While petroleum chemical firm Lotte Chemical Titan Holding Bhd (KL:LCTITAN) has led the gains by climbing as much as 19.6%, it is followed closely by Sunway Construction Group (KL:SUNCON) — a proxy to the data centre craze — by climbing 19.1% this week.
SunCon on Monday said that it had accepted a revised contract price of RM3.2 billion for a data centre construction project in Sedenak Tech Park (STeP) in Kulai, Johor.
Furthermore, Vitrox Corp Bhd (KL:VITROX) surged 15.9% over the past five days to chart a new two-year high. The rally came after Nvidia Corp chief executive officer Jensen Huang’s keynote address at Computex Taipei, which showed that ViTrox was one of the key players of edge AI and robots in the factory ecosystem of Foxconn Industrial Internet.
KSL Holdings Bhd (KL:KSL) which has recently acquired parcels of land in Pulai, Johor — a hotspot for data centres — also emerged among the top gainers by climbing 12.5%.
Another player in the local semiconductor sector — Inari Amertron Bhd (KL:INARI) — recorded a double-digit gain of 11%, tracking the recent tech rally in Wall Street propelled by Apple Inc, whose shares rose to a record high after introducing its new AI platform called Apple Intelligence.
Technology companies have also led the gains among companies valued between RM800 million and RM2 billion. JCY International Bhd (KL:JCY) has surged 39.8% over the past five trading days, while SNS Network Technology Bhd (KL:SNS) jumped 33.9% and Notion VTec Bhd (KL:NOTION) climbed 24.8%.
Followed closely behind is property group LBS Bina Group Bhd (KL:LBS) which climbed 23.6%, and construction arm Binastra Corp Bhd (KL:BNASTRA) which climbed 21.3%.
Interestingly, at least 40 counters valued between RM200 million to RM800 million have recorded double-digit percentage gains over the past five days, according to data compiled by The Edge.
The top movers in the category are logistic company Hubline Bhd (KL:HUBLINE) with a 62.5% gain, telecommunications network provider Hextar Capital Bhd (KL:HEXCAP) with a 55.2% gain, and electronic manufacturing services (EMS) provider K-One Technology (KL:K1) with a 50% gain.
Construction outfit Jati Tinggi Group Bhd (KL:JTGROUP) came in fourth place by surging 47.1%, followed by software company Nova MSC Bhd (KL:NOVAMSC) which surged 43.5%.
The gains among companies valued above RM15 billion over the past five days were relatively lacklustre, with only nine out of 31 counters recording gains, led by Gamuda Bhd (KL:GAMUDA) which has secured multiple data centre jobs year-to-date with an 8.1% gain.
Gamuda had in May announced that it has secured contracts worth a combined value of RM1.74 billion to build a hyperscale data centre for Sime Darby Property Bhd (KL:SIMEPROP) at the latter’s Elmina Business Park.
Meanwhile, Sunway Bhd (KL:SUNWAY) recorded a 7% gain, while YTL Power International Bhd (KL:YTLPOWR) recorded a 4.4% gain.
YTL Power had in December last year confirmed that it is going to collaborate with Nvidia to build an AI infrastructure that will be powered by the US-based chip giant’s technology, with the first phase of the data centre expected to commence operations by the middle of this year.
When contacted, Fortress Capital chief executive officer Datuk Thomas Yong told The Edge that the construction sector’s valuation has been re-rated towards the top end of its historical range.
“While stocks with cyclical businesses typically trade at wider valuation fluctuations, these are no longer low-hanging fruits, and investors are likely to be tilting more to a trading stance on the sector,” he added.
What’s next?
Meanwhile, Areca Capital Sdn Bhd CEO Danny Wong believed that the strong momentum in both construction and technology counters would be sustainable, driven by the data centre craze which would benefit both upstream and downstream components.
“The supply chain of the data centre ecosystem starts with land owners, which we saw many property developers with land banks first to benefit,” he told The Edge.
“I believe next is the large plantation land owners, as this is multiples times more profitable than palm oil.”
He said companies involved in the construction, power cables, substations, infrastructure, mech engineering and ventilation systems will benefit even before the data centres start their operations.
“The later parts of the supply chain like UPS [uninterruptible power supply], hardware and servers, transceivers, and HDD [hard disk drives] components are highly connected to the strong demand of data centre theme,” he added.