In the dynamic landscape of the data center industry in Malaysia, investors and listed companies are strategically maneuvering to tap into the burgeoning opportunities arising from the sector’s growth. As the data center boom continues to gain momentum, it is essential to decipher the key thematic plays and exercise caution in navigating this space.
The industry expert, Gary Goh from Sprint DC Consulting, emphasizes the importance of a credible track record in serving data centers. With DCs having well-established global supply chains, companies claiming newfound capabilities in this realm face scrutiny regarding their past experience in the field. Simply riding the wave of the DC boom may not suffice if a company lacks a proven history of proficiency in catering to data center needs.
Despite the need for caution, the sector presents promising prospects for various stakeholders. Landowners stand to benefit from selling land to DC operators, construction firms secure contracts for building infrastructure, and energy providers like TNB are poised to capitalize on the increased demand for electricity from data centers.
The Malaysian DC market is forecasted to experience substantial growth, offering lucrative opportunities for businesses across different sectors. The cost-effective nature of constructing DCs in Malaysia compared to neighboring countries further enhances the country’s appeal as a favored destination for DC investments.
Notable players in the construction domain such as Gamuda Bhd, Sunway Construction Group Bhd, and IJM Corp Bhd have already secured significant contracts in the DC space. Additionally, property developers like UEM Sunrise Bhd and Crescendo Corp Bhd have capitalized on selling land for DC development projects.
As the DC theme continues to play out in the market, mid and small-cap stocks are witnessing a ripple effect of the boom. Research firms like JP Morgan advocate a selective approach to investing in the DC space, emphasizing the importance of choosing companies that provide essential equipment and services for the industry.
The evolving DC ecosystem consists of various categories ranging from location and basic infrastructure to hardware and power connectivity. Investors are advised to evaluate potential beneficiaries based on these key categories and adopt a strategic investment approach.
While the DC sector’s growth mirrors the earlier glove mania, investors are advised to exercise caution and conduct thorough research before diving into the DC play. Experts suggest that companies leaping onto the DC bandwagon without a solid foundation may face challenges in sustaining their performance in the long run.
Notwithstanding the potential pitfalls, the DC boom presents a host of opportunities for companies in the energy sector. With the rising demand for electricity from data centers, listed electricity producers like TNB and Malakoff Corp Bhd are well-positioned to benefit from this trend.
In conclusion, the DC thematic play in Malaysia offers a wealth of opportunities across various industries. As investors navigate this space, a prudent and discerning approach will be crucial in capitalizing on the sector’s growth potential while mitigating associated risks.
