PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is expected to be a beneficiary of the Johor-Singapore Special Economic Zone (JS-SEZ), given the group’s wide area of expertise.
RHB Investment Bank noted that the group had several projects ranging from industrial buildings to renewable energy.
“We still favour SunCon and even without the JS-SEZ, its prospects are backed by the Mass Rapid Transit 3, reinstatement of the Light Rail Transit 3 stations and Penang LRT.
“The financial close of the Song Hau 2 power plant (expected by the first half of 2024) may add circa RM6bil to its order book,” said the research house in a report.
“The JS-SEZ could either be in Kulai, which houses the Sedenak Tech Park (STeP) or somewhere near the Tuas Link.
“Should the JS-SEZ be situated near the Second Link, we may see spillover effects on the Sunway City Iskandar Puteri (SCIP), with 1,770 acres near the Second Link,” it said.
The research house noted that SunCon has completed around RM1.7bil worth of projects in Johor, with RM900mil jobs in SCIP.
“Assuming the JS-SEZ is in Kulai, SunCon already has a foothold in places like STeP via the RM1.7bil data centre project it secured in December 2022.
Additionally, RHB said the JS-SEZ could likely spell opportunities from the engineering, procurement, construction and commissioning (EPCC) of solar plants.
“Recall that SunCon has secured around RM500mil of EPCC contracts for solar projects. Solar energy prospects could be further backed by Malaysia’s move to reverse the policy of banning exports of renewable energy to Singapore.”
Separately, RHB noted that SunCon has strengthened its position for industrial jobs in general, after securing the RM298mil job from Daiso Malaysia Group for a global distribution centre warehouse in Pulau Indah, Selangor.
“SunCon will be eyeing projects under the said RM8bil carbon neutral logistics hub,” said the research house.
RHB has a “buy” call on SunCon with a target price of RM2.42.
For the third quarter ended Sept 30, 2023, SunCon’s net profit rose to RM35mil from RM22.72mil in the previous corresponding period, while revenue grew to RM673.51mil from RM469.25mil a year earlier.
SunCon said revenue and net profit in the third quarter ended September 2023 improved for all segments.
Basic earnings per share in the quarter under review stood at 2.72 sen versus 1.76 sen previously.
