Gamuda, Sunway Construction, Binastra: 13MP: Let’s Get Rolling; Maintain OVERWEIGHT
- Maintain OVERWEIGHT; Top Picks: Gamuda (GAM), Sunway Construction (SCGB), and Binastra. The 13th Malaysia Plan (13MP) was tabled yesterday in Parliament with MYR430bn (annual average of MYR86bn) worth of gross development expenditure (DE) targeted for the 2026-2030 period vs the MYR415bn (annual average of gross DE budgeted for the 12th Malaysia Plan or 12MP (2021-2025). Therefore, we believe the 13MP DE should continue to facilitate infrastructure growth in the country.
- Further details of the DE. The total MYR430bn gross DE is earmarked for the economic sector, including infrastructure, info-structure, public transport, flood mitigation, affordable housing, and capacity-building projects, amongst others. Specific projects highlighted under the 13MP (which are already known) include the Sarawak-Sabah Link Road, Pan Borneo Highway, the Central Spine Road from Bentong (Pahang) to Kuala Krai (Kelantan), Trans Borneo Highway (formerly known as Pan Borneo Phase Two of the Sarawak-Sabah Link Road), widening of the PLUS highway for the Senai Utara-Machap stretch, Light Rail Transit (LRT) 3, and Penang LRT.
- Public-private partnership (PPP) projects continue to be implemented via the Public-Private Partnership Master Plan 2030 (PIKAS 2030), with the Government projecting MYR61bn worth of private sector funding under the 13MP. PIKAS 2030 has outlined a list under the “Strategic Thrust 3: Expanding PPP models to diversify projects” of the plan, which includes (among others) the West Ipoh Span Expressway, Putrajaya-Bangi Expressway, Ipoh Sentral Transit Oriented Development, and East Coast Expressway Phase 3.
- Notably, there was a strong emphasis on flood mitigation projects. During the 13MP period (2026-2030), the Government targets to complete 55 flood mitigation projects in 2030 from 17 in 2024. Efforts to mitigate floods will continue with 43 high priority flood mitigation projects worth MYR12bn that started last year. Some of the flood mitigation projects being executed include those at Kuching; the basins of the Johor, Muar, and Pahang Rivers; Baling in Kedah; Sungai Likas in Sabah; and Sungai Trolak in Perak. Investable names in the flood mitigation space include Malaysian Resources Corp, GAM, and Varia (VARIA MK, NR).
- Multi-tiered foreign worker levy (MTFWL) to be implemented in 2026. While no details were disclosed under Budget 2025 with regards to the MTFWL, we base our hypothetical earnings impact on multi-tiered levy rates proposed for 2021 from the Institute of Labour Market Information and Analysis. Our preliminary estimates find that the earnings of contractors like SCGB will be reduced by <1% (Figures 4 and 5).
- Key downside risks to our sector call are unexpected slowdowns in job rollouts, labour shortages, and scale downs of data centre investments into Malaysia.
Top Picks
Analysts
Adam Bin Mohamed Rahim
+603 2302 8101
adam.mohamed.rahim@rhbgroup.com
DE* so far for 12MP (2021-2025)
| Year | Value |
|---|---|
| 2021 | 63.3 |
| 2022 | 70.2 |
| 2023 | 95.1 |
| 2024 | 82.3 |
| 1Q25 | 17.6 |
Note: *Net DE, which excludes loan recoveries
Source: Bank Negara Malaysia, Ministry of Finance
Company Financials
| Company Name | Rating | Target (MYR) | % Upside (Downside) | P/E (x) Dec-25F | P/B (x) Dec-25F | ROAE (%) Dec-25F | Yield (%) Dec-25F |
|---|---|---|---|---|---|---|---|
| Binastra | Buy | 2.64 | 44.9 | 15.2 | 5.4 | 41.1 | 2.0 |
| Econpile Holdings | Buy | 0.48 | 21.2 | 91.4 | 1.7 | 1.8 | 0.2 |
| Gabungan AQRS | Buy | 0.33 | 60.5 | 4.8 | 0.2 | 4.3 | 4.9 |
| Gamuda | Buy | 5.86 | 13.2 | 25.9 | 2.5 | 9.8 | 1.9 |
| IJM Corp | Buy | 3.30 | 15.5 | 18.8 | 1.0 | 4.6 | 2.8 |
| Kerjaya Prospek | Buy | 2.80 | 37.4 | 13.6 | 2.3 | 16.7 | 5.9 |
| KKB Engineering | Buy | 1.74 | 27.1 | 16.9 | 0.9 | 5.6 | 3.0 |
| Malaysian Resources Corp | Buy | 0.67 | 25.9 | 41.1 | 0.5 | 1.3 | 1.9 |
| MGB | Buy | 1.02 | 99.2 | 5.5 | 0.5 | 8.8 | 5.4 |
| Pintaras Jaya | Buy | 2.06 | 37.0 | 10.1 | 0.6 | 6.3 | 3.0 |
| Sunway Construction | Buy | 6.55 | 24.9 | 22.4 | 6.8 | 32.2 | 2.7 |
Source: Company data, RHB
Figure 1: Malaysia’s DE based on each Malaysia Plan
| Malaysia Plan | Planned DE (MYRbn) | Revised DE (MYRbn) | Actual DE (MYRbn) |
|---|---|---|---|
| 8MP (2001-2005) | 160 | 170 | 110 |
| 9MP (2006-2010) | 200 | 230 | 222 |
| 10MP (2011-2015) | 230 | – | 216 |
| 11MP (2016-2020) | 260 | 220 | 249 |
| 12MP (2021-2025) | 400 | – | 415 |
| 13MP (2026-2030) | 430 | – | – |
Note: The 10MP had no mid-term review and the DE is expressed at gross level
Source: Bank Negara Malaysia, Ministry of Finance
Figure 2: PPP projects identified as key outputs of PIKAS 2030 under Strategic Thrust 3: Expanding PPP models to diversify projects (not exhaustive)
| Projects | Proposed Model |
|---|---|
| Duta-Ulu Kelang Expressway (DUKE) Phase 2A, Kuala Lumpur | Build-Operate-Transfer |
| Putrajaya-Bangi Expressway (PBE), Selangor | Build-Operate-Transfer |
| West Ipoh Span Expressway (WISE), Perak | Build-Operate-Transfer |
| Kuala Lumpur-Karak Highway (Expansion) | Build-Operate-Transfer |
| KL Sentral Station (Redevelopment) | Build-Redevelop/Regenerate-Operate-Transfer |
| Express Rail Link (ERL) (Extension) | Build-Operate-Transfer |
| West Port Container Terminal (CT10-CT17), Selangor (Expansion) | Build-Operate-Transfer |
| Kuala Lumpur Northern Dispersal Expressway (KL NODE) | Build-Operate-Transfer |
| Paroi-Senawang Link (PSL), Negeri Sembilan | Build-Operate-Transfer |
Source: PIKAS 2030
Figure 3: Current foreign worker levies imposed
| Sector | Current foreign worker levy (annual) |
|---|---|
| Manufacturing | MYR1,850 |
| Plantation & Agriculture | MYR640 |
| Mining | MYR1,850 |
| Service | MYR1,850 |
| Construction | MYR1,850 |
Source: Ministry of Home Affairs
Figure 4: Multi-tiered foreign worker levy system proposed earlier for implementation in 2021 before postponement
| Sector | Foreign worker dependency ratio | Levy rate (MYR) (annual) |
|---|---|---|
| Manufacturing | Tier 1: ≤ 35% Tier 2: > 35% ≤ 60% Tier 3: > 60% ≤ 75% |
Tier 1: MYR1,850 Tier 2: MYR2,100 Tier 3: MYR2,400 |
| Plantation & Agriculture | Tier 1: ≤ 45% Tier 2: > 45% ≤ 65% Tier 3: > 65% ≤ 82% |
Tier 1: MYR640 Tier 2: MYR685 Tier 3: MYR780 |
| Mining | Tier 1: ≤ 20% Tier 2: > 20% ≤ 35% Tier 3: > 35% ≤ 50% |
Tier 1: MYR1,850 Tier 2: MYR2,200 Tier 3: MYR2,550 |
| Service | Tier 1: ≤ 25% Tier 2: > 25% ≤ 40% Tier 3: > 40% ≤ 50% |
Tier 1: MYR1,850 Tier 2: MYR2,200 Tier 3: MYR2,550 |
| Construction | Tier 1: ≤ 25% Tier 2: > 25% ≤ 40% Tier 3: > 40% ≤ 50% |
Skilled workers Tier 1: MYR1,850 Tier 2: MYR2,050 Tier 3: MYR2,300 Non-skilled workers Tier 1: MYR2,000 Tier 2: MYR2,200 Tier 3: MYR2,500 |
Note: The rates shown are as per the proposal for implementation in Jan 2021 by the Cabinet before postponement and hence could differ once the Government proposes new levy rates for 2026
Source: Institute of Labour Market Information and Analysis
Figure 5: Hypothetical example for the calculation of MTFWL
| Contractor: SCGB | Assuming all foreign workers are skilled | Assuming all foreign workers are non-skilled |
|---|---|---|
| Approximate total workforce | 1,700 | |
| Approximate foreign workers | 600 | |
| Foreign worker % out of total workforce | c.35.3% | |
| Number of foreign workers at Tier 1 Levy (≤ 25% of total workforce) – the first 25% of workforce of 1,700 people | 25% x 1,700 = 425 | |
| Number of foreign workers at Tier 2 Levy (> 25% ≤ 40% of total workforce) – the following 15% of workforce of 1,700 people (or lower which, in this case, is 10.3% which is the remainder) | 10.3% x 1,700 = 175 | |
| Number of foreign workers at Tier 3 Levy (> 40% ≤ 50% of total workforce) – Not applicable since percentage of foreign workers out of total manpower is 35% which does not hit or exceed 40%. | Not applicable | |
| Total annual levy paid at Tier 1 levy rate (A) | MYR1,850 x 425 foreign workers = MYR786.3k | MYR2,000 x 425 foreign workers = MYR850k |
| Total annual levy paid at Tier 2 levy rate (B) | MYR2,050 x 175 foreign workers = MYR358.8k | MYR2,200 x 175 foreign workers = MYR385k |
| Total annual levy paid at Tier 3 levy rate | Not applicable | Not applicable |
| Total annual levy paid under MTFWL (A+B) | MYR1.15m | MYR1.24m |
| Total annual levy paid there if there was no MTFWL | MYR1,850 x 600 foreign workers = MYR1.11m | |
| Additional annual levy paid under MTFWL | MYR35k | MYR130k |
| Estimated reduction in FY25F earnings | Less than 0.1% | Less than 0.1% |
Source: Company data, Institute of Labour Market Information and Analysis, RHB
RHB Guide to Investment Ratings
| Buy: | Share price may exceed 10% over the next 12 months |
| Trading Buy: | Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain |
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| Take Profit: | Target price has been attained. Look to accumulate at lower levels |
| Sell: | Share price may fall by more than 10% over the next 12 months |
| Not Rated: | Stock is not within regular research coverage |
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