InvestIdeas

not vested

Trading Buy: SUNCON-5263
(Last price: RM2.01, Potential upside +18.4%)

Company Profile
• SUNCON offers integrated construction services and has precast concrete business in Singapore. The group has commendable execution capability, putting it in a prime spot to ride on the robust construction upcycle.

Trading Catalyst
• HLIB maintains a BUY rating with TP of RM2.85, offers 41.8% upside.
• Valuation is undemanding at 13.5x FY19 P/E (16% and 5% lower than IJM and Gamuda), supported by superior ROE of 28% as well as recurring orders from its parent company and key GLC clients.
• Strong earnings visible backed by orderbook over RM6bn.
• Downside limited amid deeply oversold levels.

Technical View
• Resistance: RM2.10 / RM2.22 / RM2.38
• Support: RM1.95 / RM1.90
• Cut loss: RM1.88

Key Financial Stats
• Trading at 13.5x FY19 P/E (ex-cash 11.7x), supported by FY17-19 earnings CAGR of 18% and strong ROE of 28%.

Source: HLIB

not vested

Sunway Construction (SCGB MK)
2Q23: Within Expectations

Suncon’s 1H23 earnings came in within expectations, despite accounting for only 41% of our forecasts and 39% of consensus estimates.

We anticipate higher earnings in 2H23 underpinned by stronger progress billing as well as improved labour intake.

The group’s near-term earnings outlook remains promising backed by its robust outstanding orderbook of RM5.8b as of end-2Q23 (2.7x cover ratio of its 2022 revenue).

Maintain HOLD. Target price: RM1.69.

Source: UOBKH

https://research.uobkayhian.com/content ... c001fbc3c5

not vested

HLIB raises target price for Sunway Construction to RM2.10

By Surin Murugiah

KUALA LUMPUR (Sept 11): Hong Leong Investment Bank (HLIB) Research has maintained its “buy” rating for Sunway Construction Group Bhd (SunCon) at RM1.89, with a higher target price (TP) of RM2.10 (from RM2.07), and said SunCon’s performance for the first half ended June 30, 2023 (1HFY2023) was slightly disappointing, on the back of slow progress of its key data centre project.

In a note on Monday, the research house, however, said delays were temporary and better than feared, and SunCon's Corporate Green Power Programme wins and track record in the Large Scale Solar 4 scheme could position the company to benefit from the National Energy Transition Roadmap.

It said contract flows could pick up, given various award decisions due.

“[The] precast [business] is on track for a strong performance in FY2023, and looks set for growth in FY2024-25.

“[We made] minor tweaks to [our] FY2023/24/25 forecasts by -1.1%/+1.2%/+0.6%.

“[We] maintain buy, with a marginally higher TP of RM2.10, post minor tweaks in [our] earnings [forecasts],” the research house said.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/681950

not vested

A year of optimism for Sunway Construction

Expects multiple upside risks to the group’s management target, given the vibrant data centre and industrial markets, potential formalisation of its Vietnam project and mega rail rollout.

We see multiple upside risks to management’s conservative target.

“This is given that projects such as Free Commercial Zone in Iskandar Puteri (Phase 1 to be completed by 2025) in Johor, mixed development Cochrane project, Mass Rapid Transit 3 (CMC301 and 302) worth RM13bil and Song Hau 2 power plant in Vietnam worth RM6.3bil was not included,” it noted.

With the potential rollout of Penang Light Rail Transit in 2024, the research house said SunCon could also participate in the work packages.

On the group’s data centres, HLIB Research said SunCon’s maiden data centre project (JHB1X0) could see sluggish contribution in 1Q24, as contract progress transitions to “notice to proceed 2”, which would require finalised specs from end users.

It maintained a “buy” call on the stock with a higher target price of RM2.95.

Source: The Star

https://www.thestar.com.my/business/bus ... nstruction

SunCon to stay active in data centre initiatives

Secured its second data centre project in Johor.

Outstanding order book now stands at RM5.3bil, with RM2.51bil in new orders secured up to December 2023.

Source: The Star

https://www.thestar.com.my/business/bus ... nitiatives

Sunway Construction (SCGB MK)
4Q23: Ends 2023 With A Bang

Suncon’s 4Q23 earnings outperformed, exceeding our and consensus estimates by 28% and 22% respectively.

We anticipate higher earnings in the upcoming quarters stemming from stronger progress billing amid eased labour issues.

The group’s nearterm earnings outlook remains resilient, supported by its outstanding orderbook of RM5.3b as of end-23 and potentially higher replenishment in 2024.

Maintain BUY.
Target price: RM2.93.

Source: UOBKH

https://research.uobkayhian.com/content ... 6d86a3cca4

not vested

Poised to clinch more data centre projects

Reiterate Add, with a higher TP of RM3.44. FY24F-25F EPS raised 9-10%.

4Q23 beat expectations; first move advantage in Johor’s data centre scene.

ICPH in Singapore, and expertise in ACMV and geotechnical engineering are key positive attributes giving it a leg up when bidding for data centre projects

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 4D95CD1275

not vested

Earnings positively surprised, but … Valuations have run ahead; D/G to SELL

SCGB’s 4Q23 core net profit (CNP) positively surprised on stronger margins at the precast ops.

On incorporating the latest margin and higher job win assumptions, we raise FY24E/FY25E CNP by 7%/25%.

Amid positive job wins prospect, we peg on a higher 19x PER (mean) on FY24E earnings (previously 16.5x or -0.5SD of mean), leading to a higher TP of MYR2.30 (+24%).

While we continue to like SCGB for its strong execution capability, valuations have run ahead with the stock now trading at 22x FY24E PER. D/G to SELL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/365288.pdf

not vested

Sunway Construction (SCGB MK)
Banking On Stronger Private Project Flows

Suncon is set to deliver record-high earnings in 2024, underpinned by its robust orderbook of RM5.3b as of end-23 as well as potential margin recovery.

We also believe the group is in pole position to exceed its RM3.0b replenishment target on the back of the strong project pipeline from both the public and private segments.

Maintain BUY.
Target price: RM3.33.

Source: UOBKH

https://research.uobkayhian.com/content ... c622746536

not vested

Sunway Construction (SCGB MK)
1Q24: Within Expectations

Suncon’s 1Q24 earnings came in within expectations, despite accounting for just 16-18% of our and consensus estimates.

We foresee higher earnings in the coming quarters on the back of accelerated progress billings as well as better profit margins.

We remain upbeat on Suncon’s near-term earnings, underpinned by its outstanding orderbook of RM6.3b as of 1Q24 and potentially higher replenishment in 2024.

Downgrade to HOLD due to limited upside. Target price: RM3.33.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email