The market capitalisations of these Malaysian stocks have compounded nearly three times from 2024 to late-2025, and many MEP-linked stocks have already more than doubled, according to analysts Samuel Tan, Nigel Ng, Yen Voo, Sumedh Samant, Bill C Lin, Alan Hon, Stephen Tsui, Ranjan Sharma and Gokul Hariharan.
While JP Morgan did not share specific stock picks, Bursa-listed companies involved in ventilation, air conditioning, cooling, power distribution, networking and security include KJTS, whose shares are up some 64% year to date (ytd) as at Nov 24, MN Holdings (+38% ytd), Jati Tinggi (+26% ytd), CBH Engineering (+25% ytd) and Powerwell (+12% ytd).
However, other names like Engtex are down 5.6% ytd, alongside Malaysia-listed peers like Southern Score Builders (–4.9% ytd), Critical Holdings (–9.8% ytd), UUE Holdings (–13.6% ytd) and He Group (–33.3% ytd).
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That said, the analysts still see MEP as an “underappreciated second-layer beneficiary” of the data centre boom, with “meaningful upside ahead”.
Four key costs
The JP Morgan analysts separate data centre capital expenditure (capex) into four components: the construction of the building, facilities and power and water utilities; server equipment, power supply and racks; networking equipment, switches and transceivers; and storage.
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Data centre developers, which are usually landbank owners, sit at the top of the value chain, says JP Morgan. They set the scope, standards and timelines before appointing main contractors to deliver infrastructure works both inside and outside the data centre hall.
Inside, works are largely divided into two categories: the “core and shell” — such as works to the structural and architectural foundations of the data centre hall — and MEP.
The former involves piling, roofing, walls, doors and power and water connections, among others; while the latter refers to the integrated technical systems of the data centre that power, cool and protect the facility to ensure continuous uptime, says JP Morgan.
The MEP contract is typically awarded to a main contractor, which then engages specialist subcontractors to get the data centre hall ready. Leading Malaysia-listed main contractors include Gamuda, whose shares are up some 16.0% ytd, IJM Corporation (–19.0% ytd) and Sunway Construction (+32.4% ytd).
JP Morgan is “overweight” on Gamuda and “neutral” on the other two listed main contractors — “all of whom have won their share of data centre contracts in the past three years”, according to JP Morgan.
MEP works “bring the data centre to life”, says JP Morgan, “transforming the empty structure into a functioning, high-availability facility”.
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Within MEP, the electrical segment dominates the scope of work and technicalities. This has attracted several newly listed players positioning to capture growth from the upcoming engineering, procurement, construction and commissioning (EPCC) projects and equipment supply jobs, say JP Morgan’s analysts.
Malaysia’s local players dominate the electrical sub-segment. Local MEP players are “most competitive” in electrical works and equipment supply — “by far the largest and most technical portion of the scope”, says JP Morgan.
Meanwhile, the mechanical segment tends to be handled by regional specialists due to the high technical complexity and reliability standards of data centre cooling systems, says JP Morgan, while plumbing tenders are often executed in-house by the main contractors.
Sizing up capex
JP Morgan analysts estimate that one acre of land supports roughly 1 megawatt (MW) of data centre capacity, though “highly efficient” designs by hyperscalers like Google and Microsoft can reach up to 1.5MW per acre.
In Malaysia, the total construction cost is projected at RM30 million ($5.51 million) per MW, evenly divided between core and shell costs and MEP costs.
Within MEP, JP Morgan estimates the cost breakdown as 45% mechanical (about RM6 million/MW), 40% electrical (RM5.4 million/MW), and 15% plumbing (RM2 million/MW).
From an equipment standpoint, the mechanical segment is largely dominated by regional players such as Daikin, Carrier, Stulz, Vertiv and Johnson Controls, says JP Morgan. “There are only a handful of Malaysian players here, typically taking on subcontracting works. Notable local players here include KJTS and CBH Engineering, which provide air-conditioning and mechanical ventilation installation.
However, contract sizes remain relatively small given the one-stop solution [advantage] of the larger, regional players.”
Meanwhile, the electrical system comprises two main components: electrical works and owner-furnished equipment. The latter refers to major, high-value equipment that the developer or main contractor purchases directly rather than through a subcontractor.
Here, the supply landscape is dominated by regional and global original equipment manufacturers (OEMs) such as Schneider Electric, Vertiv, ABB, Siemens and Cummins. Malaysian firms, such as Kawan Renergy and Sime Darby, serve as authorised distributors and service partners for backup generators.
The larger slice of the electrical pie is electrical works, which covers the full installation, wiring and commissioning of power distribution systems across the data centre. According to JP Morgan, this is the most active segment for Malaysia-listed contractors, such as Southern Score Builders, MN Holdings and He Group.
Meanwhile, MEP subcontractors are still required to procure components such as switchboards, distribution boards and cables. These are typically supplied by Southern Group, Powerwell, Pekat Group and United U-Li Corporation.
“Competition in this segment remains relatively mild,” say the analysts, “as local suppliers cater mainly to domestic demand and face limited overlap with regional MEP giants”.
Finally, plumbing plays a relatively minor but essential role in data centres, notes JP Morgan, covering domestic water supply, drainage and minor sprinkler loops, among others.
Unlike electrical or mechanical works, plumbing is generally managed directly by the main contractor, say analysts. “As a result, there are few specialised players in this space.”
In Malaysia, infrastructure firms like Gamuda are expanding into water reservoir and utility network development; JP Morgan analysts say this is “increasingly complementary” to their expertise, given the country’s water shortage issues.
Pipe supplier Engtex, meanwhile, further complements the main contractor’s plumbing-related offerings, adds JP Morgan.
‘Significant’ pipeline
While Malaysia’s national utility firm Tenaga Nasional Bhd (TNB) cites 3.5 gigawatts (GW) of data centre projects as “completed”, JP Morgan believes this largely reflects grid-level readiness rather than full data-hall energisation — a crucial step in commissioning new data centres.
This aligns with today’s “low utilisation” of 0.6GW, implying a 17% user time-to-revenue (UTR) rate, and with JP Morgan’s internal tracking of only 0.5GW of “truly live” capacity.
“The wide gap between grid readiness and actual load-up underscores the significant pipeline of MEP works still underway,” says JP Morgan. “We believe there is still [an] abundance of job awards in the ‘last-mile connectivity’ phase, connecting the grid, substation, external and internal data centre hall [and the] server-rack level.”
As the 3.5GW of grid-ready capacity gradually converts into fully energised halls, JP Morgan expects “sustained job flow and steady revenue recognition” for MEP contractors over the next 12 to 18 months.
Using RM15 million per megawatt for MEP’s share of upcoming projects, JP Morgan estimates an addressable market of RM43 billion over five years.
Upcoming projects could be fast and furious; the analysts note that hyperscalers are moving away from “fragmented” contracting models — where multiple small MEP firms handle isolated pieces — towards awarding two to three large, interested turnkey packages.
“This shift aims to streamline coordination, reduce interface risks and ensure accountability, favouring larger EPCC-capable subcontractors with strong balance sheets and multi-disciplinary teams,” they add. “Smaller players risk being sidelined unless they specialise in niche areas or form strategic partnerships … Established EPCC-capable players may be better positioned than newer entrants without a track record.”
