SunCon was currently tendering for RM26bil worth of jobs.
PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is on track to achieve its new contract wins target of RM3bil for 2024, driven by data centre projects.
Year-to-date, the construction company has already secured up to RM1.6bil new contracts, representing 53% of its internal goal.Philip Capital Research in its report yesterday pointed out that SunCon remained aggressive in tendering for data centre contracts, with such projects estimated to account for 36% of the latter’s outstanding order book.
“From our recent Johor site visit, we observed significant progress in the on-going data centre projects,” the research house said, noting the K2 data centre, valued at RM289mil, had achieved about 16% project completion as of December 2023, while the Sedenak data centre, valued at RM1.7bil, had also seen progress ramp-up to meet the delivery time.
Both projects were expected to be completed by end-2024.
“Overall, we believe the data centre projects should see an accelerated billing recognition from the second quarter of 2024. We gather that SunCon is involved in two early contractor involvement data centre projects, which could potentially convert into full construction project,” Philip Capital Research said.
It maintained its “hold” recommendation on SunCon, with an unchanged target price of RM2.90, based on 18 times the estimated earnings for 2025.
“We believe that good news have been largely reflected into the current share price, which is trading at 18 times the estimated earnings for 2025,” Philip Capital Research said.
“We have imputed RM3bil to RM3.5bil order book replenishment across 2024 to 2026. We estimate that every RM500mil increase in our order book replenishment assumption would raise our earnings per share forecast and target price by about 5%,” it added.
SunCon was currently tendering for RM26bil worth of jobs, including the RM13bil Klang Valley Mass Rapid Transit 3 (MRT3), RM6.2bil Song Hau 2 Vietnam power plant, warehousing and data centre projects.
SunCon’s net profit rose 7% to RM145.1mil for the financial year ended Dec 31, 2023, from RM135.18mil in the preceding year. This was in tandem with the 24% increase in revenue to RM2.67bil in 2023 from RM2.16bil in 2022.
Its outstanding order book stood at RM5.3bil as at end-2023. The group earlier said it was optimistic of registering positive growth in 2024 based on its existing order book.
In addition, SunCon was also looking to participate in the upcoming Penang Light Rail Transit (LRT) and international airport expansion projects with a combined value of RM12bil, with tenders anticipated to roll out by end-2024.
Philip Capital Research said SunCon would stand a good chance to secure these projects, given its track record in executing the MRT2 and LRT3 projects.
