Malaysia Data Center: Beneficial Sectors and Stocks

In Southeast Asia's digital economy landscape, data centers in Malaysia are becoming a key hub connecting the region to the global digital network with its unique strategic location and booming landscape. As the wave of digital transformation sweeps across the globe, Malaysia is rapidly emerging as a bridgehead for Southeast Asia's digital economy, thanks to its prime location, business-friendly environment and continuously optimized digital infrastructure. More than just a collection of spaces for storing and processing data, data centers in Malaysia are important for driving innovation, promoting economic growth and strengthening regional connectivity.

Malaysia data centers not only provide strong data support for local businesses but also attract Internet giants, fintech companies and multinationals from around the world, making them an important choice for multinationals to set up in Southeast Asia. In addition, the rise of data centers in Malaysia implies a series of unprecedented investment opportunities.

Bursa Malaysia, as Malaysia's stock exchange, has witnessed a significant increase in the market capitalization of many data center-related listed companies, including real estate, telecommunication, technology, construction, and industrial products and services sectors, and investors have begun to turn their attention to this sector, seeking to share in the dividends of the economic growth driven by data centers. This article will look in-depth at how data centers in Malaysia have become a key engine for the regional economy, analyze their impact on different industries and reveal the potential dividends of investing in this sector.

What is Malaysia Data Center

Located in the heart of Southeast Asia, data centers in Malaysia are key nodes in the global data storage and processing matrix. These state-of-the-art facilities are the perfect combination of cutting-edge technology, strategic location and supportive policies, making Malaysia an ideal destination for organisations seeking a robust digital infrastructure.

Definition

Data centers in Malaysia are specialized facilities that store computer systems and their respective components, including servers, storage systems, and telecom equipment. These centers have an important function in the digital world by offering a dependable, safe, and flexible infrastructure for handling data, cloud computing, and internet services. The facilities are meticulously planned to ensure uninterrupted functionality by incorporating backup power sources, efficient cooling systems, and strict security measures. These features are specifically designed to preserve the accuracy and availability of data.

Malaysia's unique advantages as data centers

Political stability: Malaysia's political stability provides a reassuring environment for long-term investment. This predictability boosts the confidence of international companies looking to establish or expand their digital footprint in the region.

Excellent connectivity: Strategically located along major Internet cable routes, Malaysia boasts high-speed connectivity to key markets in Asia, Europe and beyond. Meanwhile, Johor's proximity to Singapore, one of Asia's largest data center hubs, places its data centers at the crossroads of global data flows, ensuring the lowest latency and best data transfer speeds.

Business-Friendly Policies: The Malaysian government has introduced several measures and strategies to promote and attract foreign direct investment (FDI) in the technology industry. Tax breaks, subsidies for research and development, and simplified procedures for following regulations make the establishment and functioning of a data center in Malaysia an appealing prospect.

Cost Effectiveness: In comparison to nearby nations, Malaysia provides lower operating expenses without sacrificing excellence. The cost of operating data centers can be decreased by taking advantage of low land, labour, and energy prices.

Impact on Bursa Malaysia

The booming Malaysian data center industry has significant implications for Bursa Malaysia. As data center projects take root, they catalyse growth in a number of industries ranging from construction and real estate to telecommunications, technology and utilities. This in turn drives investor interest and activity in Bursa Malaysia as valuations and trading volumes increase for companies involved in these sectors. Investors keen to capitalise on the wave of digital transformation can look for opportunities among listed entities that are directly or indirectly benefiting from the expansion of Malaysian data center ecosystem.

Impact of Malaysia Data Center and Beneficial Stocks

As a strategic pillar of the digital economy, the development of data centers in Malaysia has set off a wave of change across industries, redefining growth trajectories and providing lucrative investment avenues. The following section explores how Malaysian data center boom is impacting the economic landscape across industries in Malaysia and analyses the beneficiaries of this digital transformation.

Impact 1: Local Property sector

In the midst of Malaysia's digital revolution, the rise of data centers in Malaysia, especially in strategic locations such as Johor, is redefining the real estate landscape. As these high-tech facilities take root, they bring with them a host of economic activities that are having a significant impact on the commercial and residential property markets.

Impact of Malaysian data centers on the Local Property sector

The establishment of the Malaysian data center in Johor has had a profound impact on the commercial real estate sector. Firstly, it has triggered a surge in demand for industrial land and large commercial spaces suitable for data center construction. This demand has pushed up land values in and around designated technology parks and industrial zones, reflecting the growing interest of local and international investors. In addition, the presence of data centers has stimulated demand for ancillary commercial real estate, such as office space for support staff and service providers. As more technology companies and their partners operate near these facilities, the demand for modern, high-specification office buildings is increasing, creating opportunities for real estate investment trusts (REITs) and commercial property owners.

While data centers primarily affect commercial real estate, their indirect impact on the residential sector cannot be ignored. Professionals working in and around data centers are stimulating demand for housing, leading to higher prices and rents for residential properties, and communities close to data center clusters are attracting a high level of interest from both home buyers and renters. In addition, amenities such as retail outlets, schools and recreational facilities developed to meet the needs of a growing population have further enhanced the attractiveness of these areas, creating a ripple effect that benefits the broader residential market.

Notable Companies in Local Property Sector

(screened by year-to-date (YTD) % change and Market Cap)

Sime Darby Property Berhad (SIMEPROP): SIMEPROP's core business is property development, which includes the planning, design and construction of all types of real estate. These include master-planned townships, residences, commercial complexes and industrial parks.

Mah Sing Group Berhad (MAHSING): MAHSING's core business is centerd on real estate development through the acquisition of land and the design and construction of a wide range of properties, including landed homes, condominiums, serviced flats, commercial complexes and industrial parks.

S P Setia Berhad (SPSETIA): SPSETIA's core business is property development, which includes the conception, design and construction of a wide range of properties. The company's strength lies in the creation of large master-planned communities that combine residential, commercial and recreational uses.

Eco World Development Group Berhad (ECOWLD): ECOWLD's core business is property development and investment, with a portfolio of properties that includes residential houses, high-rise residential flats, office buildings and retail spaces dedicated to building environmentally friendly and innovative properties.

UEM Sunrise Berhad (UEMS): The main focus of UEMS is property development, which involves the construction of both residential and commercial properties. The company is also involved in property investment, where they handle a collection of assets that produce ongoing income through renting out and increasing in value over time.

IOI Properties Group Berhad (IOIPG): IOIPG's main activities revolve around the development of real estate, holding investment properties, managing properties, and operating in the hospitality sector. The company focuses on various types of development projects, such as township developments, commercial complexes, and upscale residential areas.

Impact 2: Telecommunications and Media Sector

The rapid growth of data centers in Malaysia has profoundly impacted the telecommunications and media industries. This digital transformation has not only driven the need for enhanced network infrastructure, but has also ushered in a new era of media content distribution, with far-reaching implications for both local and international players.

Impact of Malaysian Data Centers on the Telecommunications and Media Sector

The media content distribution space in data centers is increasingly reliant on high-speed internet and large-scale data transfers, and local telecom operators are facing a significant increase in network demand. This has created an urgent need for bandwidth upgrades and driven the modernization and upgrading of telecom infrastructure, including fiber optic networks and the rollout of 5G. The rise of data centers in Malaysia has prompted telecom operators to invest in new technologies to enhance network speed and stability, as well as to increase network security and reliability to meet the demand for high-speed data transmission in data centers.

The rise of data centers is causing a change in the media content distribution industry. Traditional content delivery networks are slowly transitioning towards cloud-based solutions and content delivery networks (CDNs) to decrease the delay in transmitting data and improve overall user satisfaction. This change has encouraged cooperation between those who create content and those who operate data centers, resulting in the growth of over-the-top (OTT) media services. Simultaneously, data centers' robust computing and storage abilities have facilitated the swift growth of emerging media technologies, like virtual reality (VR) and augmented reality (AR), thereby significantly enhancing the user's immersive experience.

Notable Companies in the Telecommunications and Media Sector

(screened by YTD % change and Market Cap)

Telekom Malaysia Berhad (TM): TM's primary operations encompass fixed line and mobile communication services, internet services, data centers, and cloud computing services. SingTel (SGX: Z74) and Telekom Malaysia (KLSE: TM) have signed a joint venture agreement with conditions to collaborate on the development and management of a data center campus in Johor, Malaysia.

Axiata Group Berhad (AXIATA): AXIATA's core businesses include mobile communications, digital services and infrastructure development.AXIATA owns and operates telecom tower assets and advances the implementation of innovative network technologies such as Open RAN.

Time Dotcom Berhad (TIMECOM): TIMECOM's core business consists of fibre optic broadband services, data center services and international bandwidth services.TIMECOM operates state-of-the-art data center facilities and provides colocation, cloud computing and disaster recovery solutions.

Maxis Berhad (MAXIS): MAXIS specialises in providing a wide range of communications services, including mobile communications, fixed line services, broadband, and customised solutions for companies.

CelcomDigi Berhad (CDB): CDB's core business is the provision of mobile communications services, including voice, SMS and data. It is also involved in digital services, including enterprise solutions and Internet services.

Impact 3: Utilities Sector

The construction and operation of data centers in Malaysia have had a significant impact on the utility sector, particularly in terms of energy demand. Data centers can have huge energy consumption, with rising demand for power supply and cooling systems. Local energy providers in Malaysia have to find a balance between meeting the growing energy demand and adopting sustainable practices in line with global trends.

Impact of Malaysian Data Centers on the Utilities Sector

Malaysian data centers consume large amounts of power to run servers, cooling systems and backup generators around the clock. The sheer scale of energy usage puts a huge strain on the existing power grid, which needs to be upgraded and reinforced to ensure uninterrupted power supply. Utility providers need to invest in grid infrastructure and explore innovative solutions to meet the growing demand.

Data centers generate a lot of heat due to the concentrated use of servers and require advanced cooling systems to maintain optimal operating temperatures. This requirement has increased the demand for specialized cooling technologies and services, creating new revenue streams for HVAC (heating, ventilation, and air conditioning) companies and cooling solution providers.

Considering the environmental impact of their operations, Malaysian data centers are inclined to adopt renewable energy sources to power their facilities. This shift to solar, wind and other clean energy alternatives is not only in line with global sustainability goals, but also offers strategic advantages in terms of long-term cost reductions. Utilities switching to renewable power generation and distribution will benefit from this trend by taking advantage of the growing interest in green power contracts among data center operators.

Notable Companies in the Utilities Sector

(screened by YTD % change and Market Cap)

YTL Power International Berhad (YTLPOWR): YTL Power's core business includes owning and operating power plants and multi-purpose facilities, developing, constructing and operating solar photovoltaic power plants, as well as transmitting, infrastructure and generating electricity from green energy sources while supplying water and treating wastewater. YTL Data center, YTL Power's digital infrastructure arm, is setting up a green data center campus in the state of Johor, Malaysia.

YTL Corporation Berhad (YTL): YTL's core businesses include but are not limited to, power and water, infrastructure, property development, hospitality and information technology services. Its subsidiary, YTL Power, undertakes the Group's power generation segment. YTL is setting up a large solar data center campus in Johor, which will provide renewable energy power supply through a solar farm on the campus.

Petronas Gas Berhad (RANHILL): Ranhill's core business is the provision of industrial water treatment and supply services, as well as wastewater treatment, water infrastructure, and the construction and maintenance of power and oil and gas facilities. Ranhill has the exclusive right to operate water services in the state of Johor. YTL Power has increased its shareholding in Ranhill to 53.19 %, up from 21.77 %.

Tenaga Nasional Berhad (TNB):TNB's core business covers power generation, transmission and distribution as well as power-related engineering, procurement, construction and maintenance services. The company is shifting its focus to renewable energy. TNB expects to increase its capital expenditure, particularly in the transmission and distribution sector to accommodate the establishment of data center facilities by technology companies in Johor.

Ranhill Utilities Berhad (PETGAS): PETGAS specialises in the midstream natural gas business. The company focuses on natural gas processing, transmission, distribution and liquefied natural gas (LNG) related services.

Impact 4: Technology sector

At the core of the digital transformation in Malaysia, data centers play a crucial role as they are more than mere storage locations for data. Instead, they act as powerful mechanisms that propel the progress of innovative technologies like cloud computing, big data analysis, and artificial intelligence. By promoting a strong digital foundation, these establishments are transforming the technology sector of the nation, establishing a favourable environment for creativity and advancement.

Impact of Malaysian Data Centers on the Technology Sector

Malaysia's strategic investment in data centers has catalyzed the development of a robust digital infrastructure that provides the backbone of a vibrant tech environment. This infrastructure has not only attracted multinational tech giants, but has also nurtured fertile ground for local start-ups and SMEs. With access to world-class data storage and processing capabilities, local businesses can utilise cloud computing, big data and cutting-edge technologies to scale their operations and become more competitive.

The presence of data centers in Malaysia also strengthens the local technology supply chain. Suppliers of hardware, network equipment and data center components have witnessed a surge in demand, leading to business expansion and job creation. In addition, these centers often serve as collaboration hubs, fostering cooperation between technology companies, academia and research institutes.

Malaysia's data centers provide scalable infrastructure and low-latency connectivity, making Malaysia a hotbed for startups, especially in the areas of fintech, IoT and software development. With the support of the Malaysia data center, tech entrepreneurs are able to quickly move from concept to product, accelerating the product development cycle and effectively reducing market response time.

Notable Companies in the Technology Sector

(screened by YTD % change and Market Cap)

Notion Vtec Berhad (NOTION): NOTION's core business involves precision manufacturing, in particular precision turned, milled, drilled and ground components for a wide range of applications in a number of highly technically demanding fields such as hard discs, automotive, medical and aerospace.

SNS Network Technology Berhad (SNS): SNS's business covers personal computers, laptops, servers, storage devices, networking devices, software licences, cloud computing solutions, and also ventures into smart devices and smart home solutions.

JCY International Berhad (JCY): JCY is engaged in the manufacturing of Hard Disk Drive (HDD) components including precision parts for disk drives and related assemblies.JCY is one of the major suppliers to the HDD industry, providing key components to the world's leading HDD manufacturers.

Itmax System Berhad (ITMAX): ITMAX specialises in the development, design, assembly of controllers, supply and installation of networked traffic management systems, and provides rental and management services for video surveillance and analytics systems.ITMAX currently has CCTV contracts with four district councils in Johor, and was awarded a 15-year contract by Iskandar Puteri City Council for an intelligent ITMAX currently has CCTV contracts with four district councils in Johor and was awarded a 15-year contract for an intelligent parking system by Iskandar Puteri City Council.

Malaysia Pacific Industries Berhad (MPI): MPI is focused on providing advanced packaging solutions to the global semiconductor industry. The company's core businesses include, but are not limited to, semiconductor packaging and testing, integrated circuit testing, engineering and manufacturing services.

Inari Amertron Berhad (INARI): INARI's core business is Electronic Manufacturing Services (EMS), which includes packaging and testing services for semiconductor devices and RF system packaging services for smart mobile devices and others.

Impact 5: The Construction Sector

The rapid expansion of data centers in Malaysia has not only changed the technology landscape, but has also triggered a surge in construction activity. This wave of change has opened up a plethora of opportunities for Malaysian construction companies, design consultants and building material suppliers, propelling them to the forefront of the new development era.

Impact of Malaysian data centers on the Construction sector

The construction of a Malaysia data center is a major capital-intensive undertaking that requires expertise and significant resources. This means that construction companies will be directly contracted and tasked with executing complex projects that must adhere to stringent standards of security, reliability and energy efficiency. Companies that specialise in data center construction, as well as those that can integrate advanced cooling systems, complex electrical installations and robust physical security measures, stand to gain significantly.

Along with increased construction activity, data center projects in Malaysia are also stimulating an unprecedented demand for specialist construction materials and components. Every aspect of the construction materials supply chain is on the rise, from reinforced concrete and premium steel to advanced insulation and fireproof coatings. Manufacturers and suppliers of these commodities have benefited from this surge in demand, resulting in increased production, employment opportunities and revenue streams.

In addition to the direct beneficiaries, the construction of data centers in Malaysia has stimulated ancillary services such as engineering consultancy, project management and environmental sustainability services. It has also triggered a ripple effect in industries such as transport, logistics and hospitality, as these mega-projects have attracted a labour force in need of support services.

Notable Companies in Construction sector

(screened by YTD % change and Market Cap)

Sunway Construction Group Berhad (SUNCON): SUNCON is a division that belongs to the Sunway Group. SUNCON, a company with significant expertise in the construction industry, particularly in civil engineering, infrastructure development, and managing commercial and residential projects, has been given the opportunity to construct a data center in Selangor for an American multinational corporation.

Jati Tinggi Group Berhad (JTGROUP): JTGROUP's core business includes underground and overhead power distribution, underground and overhead power transmission, and underground fibre optic cabling systems for mobile networks. Its wholly-owned subsidiary has been awarded a contract for the installation of underground cables for data centers in the southern region of the Malaysian peninsula.

Haily Group Berhad (HAILY): HAILY primarily operates in the construction sector, specializing in various areas such as residential construction, commercial construction, and civil engineering undertakings. Furthermore, the company is engaged in property development, specifically in the state of Johor. HAILY, along with its subsidiary Haily Construction, recently secured a contract to construct townhouses in Johor, Malaysia.

IJM Corporation Berhad (IJM): IJM is involved in various fields such as construction, property development, manufacturing, plantation and investment. Having been involved in the construction of various large-scale infrastructure projects including roads, bridges, ports, airports and property development projects, IJM has been awarded the design and construction of a data center for a subsidiary of Telekom Malaysia Berhad (TM) in Iskandar Puteri, Johor.

MN Holding Berhad (MNHLDG): MNHLDG specialises in underground utility engineering and substation engineering. MNHLDG has formed a partnership with Shanghai DC-Science Co Ltd with the objective of developing its first high-performance data centre in Malaysia. The company's subsidiary was selected to provide engineering services for the data centre, located in South Malaysia.

Gamuda Berhad (GAMUDA): GAMUDA has a wide range of businesses, including infrastructure development, property development, water resources and environmental engineering, underground engineering and tunnelling technology.

Gadang Holdings Berhad (GADANG): GADANG's business scope focuses on architecture, engineering, property development and utilities. Gadang Engineering, a subsidiary of Gadang, was awarded the contract to design and develop the Klang Valley Data center Zone 2 in Selangor, Malaysia.

Impact 6: Industrial Products & Services sector

The operational needs of data centers in Malaysia are increasingly becoming a strong driver for the industrial products and services sector. With data centers playing a key role in securing data and enabling efficient computing and storage, there is a huge market opportunity in the related areas of equipment, maintenance services and security solutions required.

Impact of Malaysian data centers on the Industrial Products & Services sector

At the forefront of this supply chain are manufacturers and distributors of critical infrastructure components. Malaysian data centers require state-of-the-art servers, cooling systems, power backup units and advanced networking equipment. Bursa Malaysia-listed suppliers such as electrical equipment suppliers, precision cooling system suppliers and IT hardware suppliers are well-positioned to capitalise on this demand.

The seamless operation of data centers depends on rigorous maintenance and timely technical support, which includes services such as preventive maintenance, emergency repairs and system upgrades, which are critical to the continued operation of data centers in Malaysia. Companies offering 24/7 monitoring, data center cleaning services and environmental control therefore have significant business expansion opportunities, making them the main beneficiaries of Malaysia's digital expansion.

Data centers store large amounts of sensitive information and require strong security measures to prevent physical intrusion and cyber threats. This has led to a surge in demand for advanced security systems, including biometric access control, surveillance cameras, and sophisticated cybersecurity software. Security solution providers in Malaysia are stepping up to meet this demand by offering integrated security packages tailored to the unique needs of data centers.

Notable Companies in Industrial Products & Services sector

(screened by YTD % change and Market Cap)

Powerwell Holdings Berhad (PWRWELL): PWRWELL's main focus is on delivering electrical equipment and engineering services which involve tasks such as constructing high voltage AC transmission lines, building substations, setting up distribution systems, installing cables, and supplying electrical accessories. PWRWELL has successfully obtained two purchase orders in Selangor, Malaysia, to provide, set up, and activate low-voltage distribution panels and remote power panels for data centers.

Sunway Berhad (SUNWAY): SUNWAY's business encompasses a wide range of sectors including, but not limited to, property development, construction, retail, hospitality, healthcare and education.Sunway sold land in Johor to Equalbase Pte Ltd for the development of a data center. Its subsidiary, SUNCON, was awarded the contract to build a data center in Selangor.

PGF Capital Berhad (PGF): PGF's core businesses span manufacturing, property development and agriculture. In the manufacturing sector, PGF Capital specialises in the design, production and distribution of glass mineral wool insulation and meltblown fabrics.

Malaysia Cement Berhad (MCEMENT): MCEMENT's main activities are related to cement manufacturing, clinker production and trading of cement and clinker.

Dufu Technology Corporation Berhad (DUFU): DUFU specialises in the design, manufacture and sale of precision engineered components. Primarily serving the Hard Disk Drive (HDD), Semiconductor, Automotive, and Medical Device industries, we offer a range of precision metal assemblies and plastic components.

How to trade data center beneficial stocks on Moomoo

Malaysian data centers are driving transformative growth across industries and identifying and trading stocks that are expected to benefit from this digital revolution has become a strategic pursuit for investors. Here's how you can leverage on moomoo's unique features to take advantage of, and potentially profit from, the opportunities associated with Malaysian data centers.

Identify Data center Beneficiary Stocks on Moomoo

Choosing the right platform is crucial when looking for investment opportunities that are expected to benefit from the growth of data centers in Malaysia. Here's how you can use the features of the moomoo platform to pinpoint and analyse these potential beneficiary stocks.

Sector Screening: Firstly, using the "Stocks" section on moomoo, you can screen companies by sector to pinpoint industries directly affected by the growth of data centers in Malaysia. Focus on real estate, technology, utilities, industrial products and services, and construction as these are the main potential beneficiaries.

Stock Screening: Moomoo's advanced stock screener is a powerful tool to optimize your search. Stocks are screened based on parameters such as revenue growth, earnings per share and industry-specific metrics that are consistent with the growth trends observed in the data center industry. This precise targeting helps to select the most promising Malaysian data center beneficiary stocks for further research.

News & Insights: Stay up-to-date with the latest developments in the Malaysian data center space with moomoo's real-time news feed. This keeps you abreast of contract awards, policy changes and company announcements that may affect the relevant stocks.

Featured Watchlists: Create dedicated lists of stocks benefiting from data centers in Malaysia using moomoo's customised watchlist feature. This allows you to monitor price movements, trading volumes and analyst ratings in one convenient place.

Fundamental Analysis Tools: Conduct in-depth research using moomoo's comprehensive range of fundamental analysis tools that provide detailed financial indicators, earnings reports and ratios for each company. Assess the financial health and growth prospects of potential beneficiaries before making an investment decision.

Technical Indicators: For traders who prefer technical analysis, moomoo offers a suite of indicators and charting tools to analyse stock trends, identify patterns and make informed trading decisions based on market behaviour.

Conclusion

In the context of Malaysia's ambitious plan for its digital rise, Malaysian data centers have become crucial to the transformation of the economy, with wide-ranging positive impacts across a variety of sectors. From galvanizing the tech and utilities sectors to supporting construction and industrial products and services, these digital bastions are reshaping the country's economic fabric. The ripple effect of data center development in Malaysia highlights the country's commitment to fostering a sustainable and digitally inclusive future. These facilities are not only driving innovation and attracting foreign investment but also stimulating local entrepreneurship, job creation, and skills upgrading. By leveraging advanced technologies and prioritising green initiatives, Malaysia is demonstrating a forward-looking approach to digital infrastructure development that ensures long-term economic viability.

It is critical for investors to recognize and capitalize on this digital wave. Bursa Malaysia is home to a wide range of listed companies taking advantage of the data center boom to capitalise on this growth. From tech giants and renewable energy providers to construction giants and industrial suppliers, the opportunities are endless. By conducting thorough research, utilising the analytical tools available on platforms such as moomoo and keeping a close eye on market trends, investors can strategically position themselves to benefit from this digital revolution.

However, amidst the optimism, it is important to recognise that there are inherent risks in any investment. Volatility in tech stocks, regulatory changes and changes in the global economy can all impact the performance of data center-related investments. Diversification, a long-term view and a prudent approach to risk management are key to navigating this changing landscape.