The group’s South Quay Square project in Bandar Sunway is the main earnings driver for its internal jobs segment.
PETALING JAYA: Sunway Construction Bhd’s diversification into industrial jobs, mainly data centres, will help mitigate downside risks from public infrastructure jobs, says RHB Research.
Currently, the group’s South Quay Square (SQS) project in Bandar Sunway is the main earnings driver for its internal jobs segment.
The project comprises two office towers, a retail area and a university and is expected to contribute about 16%, 16% and 7% to the group’s financial year 2023 (FY23), FY24 and FY25 pre-tax profit, respectively, said RHB Research.
The research firm said Sunway Construction secured the first work package of the SQS project for piling works in June 2019 worth RM119mil.
In August 2020, it secured a RM284mil job for the main construction of the project. The overall contract value was revised to RM756mil in December 2021.
It got additional contracts to the tune of RM607mil in April, thereby increasing the total value to RM1.3bil from RM756mil.
“With 15% to 16% completion as at the end of the first quarter of 2023, the unbilled portion of the project’s order book is RM1.1bil. This is the largest under its internal order book at 48%,” said RHB Research.
The research firm said based on its estimates, internal jobs from its parent company, Sunway, made up about 39% of its overall order book of RM6.1bil.
RHB Research has a “buy’’ call on the stock with a target price of RM2.05 a share.
It said its unchanged valuation target of 15.5 times was justified based on Sunway Construction’s order book/revenue cover of about 3.1 times and steady job flow from its parent company.
