Kenanga Research said the group’s tender book includes notable packages under the mass rail transit three, data centres and warehouse jobs.
PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is on track to achieving its internal target of RM2bil worth of construction contracts after having secured RM1.3bil worth of new jobs, in addition to a healthy tender book of RM22.7bil.
According to Kenanga Research, the groups’ tender book includes notable packages under the mass rail transit three, data centres and warehouse jobs.
SunCon is also expected to secure related-party jobs from Sunway Bhd, including additional fit-out work for Sunway Medical Damansara as well as restoration work for Sunway Pyramid and Sunway Carnival Mall, each of which are individually worth RM100mil to RM200mil.
The construction group would also be bidding for additional packages related to the Rapid Transit System project, namely the Customs, Immigration and Quarantine Complex and its surrounding structures which are worth RM800mil to RM1bil.
The project is expected to offer attractive margins due to the tight completion deadlines by 2026, with the tenders closing by June 30, 2023 and awards expected by year-end.
Kenanga Research noted that Mass Rapid Transit (MRT) Corp Sdn Bhd has asked SunCon to extend its tender validity by three months to end-September 2023.
“Should the MRT project be secured by this year, it would surpass the group’s financial year 2023 (FY23) internal replenishment target as well as our FY23 job win assumption,” the research firm added.
On another note, Suncon’s ongoing RM1.7bil data centre job, which comprises three notices to proceed (NTP) has seen a slight delay for NTP2 as the end-client is finalising its equipment requirements while NTP1 has been topped up for ongoing civil works.
For the RM6bil coal-fired power plant project in Vietnam, SunCon is finalising its agreement with its customer, Toyo Ventures Holdings Bhd, and is on track to satisfy the prerequisites for the project’s syndicated financing in order to reach financial close by September 2023, Kenanga Reseach stated in its report on the group yesterday.
As of March, SunCon’s new Industrialised Building System pre-cast plant in Singapore is currently running at 10% utilisation and the group aimed to achieve an optimal utilisation rate of 60% to 70% within the next three years.
“Through ramp-up efforts and cost optimisation, SunCon is hopeful that the pre-cast plant will break even by the end of the year and it will have an advantage over other Johor-based plants that are impacted by unexpected road closures and traffic congestion,” Kenanga Research pointed out.
The research house has maintained an “outperform” call on SunCon with a target price of RM2.13 per share based on 16 times price to earnings ratio.
