DOMESTIC contract awards in quarter one 2025 (1Q25) came in at RM16.4 bil.
This is the highest quarterly tally since 1Q16 and second highest since 2009, bettering a strong DC-driven quarter in 2Q24 at RM13.8 bil.
For context, 1Q16 numbers were achieved, driven by MRT2 underground, SPE and PBH Sarawak.
“The strong start in 2025 gives credence to our expectations of another healthy job flow environment this year prolonging sector orderbook growth cycle,” said Hong Leong Investment Bank (HLIB) in the recent Sector Update report.
1Q25 was anchored by RM11.4 bil worth of infrastructure jobs led by Penang LRT – Segment 1 (RM8.3 bil) and LRT3 reinstatement (RM2.5 bil). 
“We had earlier anticipated awards for both in 2024 but finalising delays resulted in both contracts spilling over to 2025,” said HLIB.
As such, 1Q25 bucks the trend of successive private sector driven quarters to which HLIB swill revert in the coming quarters due to ongoing tenders in the DC space.
Going forward, HLIB anticipates higher contract flows from the DC segment (RM1.2 bil in 1Q25) not least considering the sizable number of ongoing tender opportunities.
This is further corroborated by the growth in Tenaga’s total DC pipeline expanding to 5.9GW or +26% quarter-on-quarter (QoQ).
Meanwhile, the pre-construction pipeline increased by 100% QoQ from 1.1GW to 2.2GW in the final quarter of 2024.
“We estimate conservatively the preconstruction DC pipeline stands at minimum RM33 bil,” said HLIB.
While the introduction of Framework for AI Diffusion in Jan-25 by the Biden Administration adds an element of uncertainty, positive tangible developments from DC developers post-framework assuage concerns – land banking activities, build-to-lease agreements and expansion plans.
“We expect infra projects to lead the pack this year, anchored by Penang LRT, systems package award and Segment 2 tender in the second half of 2025,” said HLIB.
Other notable infra projects adding to the stream include Penang Airport WP3, roads & highways including NPE2.0 and NCH, water projects as well as hospitals.
For now, HLIB retains their OVERWEIGHT sector call and still anticipating another year of healthy job flows, anchored by infra and DC projects leading to further order book growth opportunities. —Apr 7, 2025
Main image: The Malaysian Reserve
