Sunway Construction

[winston]

not vested

Sunway Construction Group Bhd
Taking a more constructive view

Reiterate Add; we raise FY24F-FY26F EPS and TP to RM3.91.

Market pricing in RM3bn-3.5bn new wins for FY24 vs. our revised RM5.2bn.

RM6bn Vietnam project may be closer to an award where we think there is upside potential to our FY25F-FY26F EPS.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 9C21663F8B

[winston]

Sunway to focus on core businesses

For the first quarter ended March 31, 2024 (1Q24), Sunway’s net profit rose to RM172.23mil from RM141.64mil in the previous corresponding period, with its property development and healthcare segments leading the growth.

Revenue grew to RM1.42bil from RM1.26bil a year earlier.

Basic earnings per share stood at 2.27 sen against 1.98 sen previously.

The property development segment recorded revenue of RM287.7mil in 1Q24, a 16% increase compared to the same quarter in the preceding financial year. Its pre-tax profit, meanwhile, increased 68% to RM38.8mil in 1Q24.

The healthcare segment’s pre-tax profit increased 28% to RM36.8mil in 1Q24 from RM28.8mil in the previous year. Three operating hospitals, supported by a 34% increase in licensed beds to 1,158.

Construction: The total outstanding order book as at March 31, 2024 is RM6.3bil.

Source: The Star

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

[winston]

not vested

Near doubling of contract value for Sedenak

Suncon announced a near doubling in value for its Sedenak data centre contract to RM3.2bn (37% of orderbook).

This is significant as
i) it exceeds new order win guidance;
ii) Yellowwood has finalised a reputable offtaker and
iii) it anchors earnings delivery in 2H24F.

Reiterate Add and SOP-derived TP of RM3.91.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 2C693222F1

[winston]

not vested

Sunway Construction (SCGB MK)

Holding Up For Better Catalysts

While Suncon’s earnings growth remains supercharged by its robust orderbook replenishment with catalysts such as the potential awards of mega projects and more data centre-related private job flows, we deem these to be fairly reflected in the ytd aggressive share price movement.

Risk-reward appears less appealing at this juncture as valuations are trading at more than +1SD above the mean based on 2025 earnings.

Downgrade to HOLD despite raising the valuation yardstick and target price to RM4.78.

Source: UOBKH

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

[winston]

not vested

SunCon earnings to be supported by RM7.4bil order book

Higher order book replenishment target of RM4bil to RM5bil for 2024.

SunCon is building five data-centre projects for four multinational clients.

SunCon posted a 17.8% higher net profit of RM39mil in the second quarter (2Q24) compared with RM33mil in the year-ago quarter.

Revenue for the quarter rose 7.8% on-year to RM651.2mil while earnings per share climbed to 3.01 sen versus 2.56 sen in 2Q23 previously.

For the six-month period, SunCon’s net profit of RM71.3mil was 17.2% higher on-year while revenue expanded 11.5% to RM1.26bil.

Source: The Star

https://www.thestar.com.my/business/bus ... order-book

[winston]

not vested

2Q24: Slower Half Of The Year; Picking Up In 2H24

2Q24 earnings growth came in slower but within expectations, as we anticipate a much stronger 2H24 premised on accelerated progress billings and better margins from newly-secured data centre works.

While Suncon further revised its orderbook replenishment target with catalysts such as potential awards of mega projects and more data centre-related private job flows, valuations appear fair at close to +1SD above mean based on 2025 earnings.

Maintain HOLD and target price of RM4.78.

Source: UOBKH

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

[winston]

not vested

Constructing DCs while the sun shines

Visible pipeline from upsizing of DC projects and fresh tenders should enable Suncon to achieve the higher end of RM4bn-5bn new win target for FY24F.

DC opportunities in Johor still abundant but diversification is also key.

Reiterate Add and moving our valuation to GGM with higher TP of RM6.00.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 21BB976F8D

[winston]

ESG 2.0: Improvement in scoring

Above average ESG score, at 72/100

We review SCGB’s ESG matters post release of its FY23 Annual & Corporate Governance Reports.

Our ESG score for SCGB is updated to 72 (out of 100) vs. 66 in our last review, which retains its above-average ESG rating.

Positively, we see expansion in its Scope 3 tracking, and SCGB is moving closer to some of the “Social” targets that it has set for itself.

SCGB has also reiterated its target for Net Zero Carbon Emissions by 2050.

TP: RM 3.70

Strong execution capability but fully priced in We value SCGB at 21x PER (+0.5SD of mean) on FY25E earnings, deriving a MYR3.70 TP. We continue to like SCGB for its strong execution capability with a long established delivery track record, but valuation is pricey at 26x FY25E PER; the stock remains a SELL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/414684.pdf

[winston]

vested

Sunway Construction Group Bhd has been awarded additional tenant improvement works for its data centre construction project at the Sedenak Tech Park in Johor for RM347.0mn.

Source: The Star

[winston]

not vested

Data Centre building contracts expected to buoy SunCon showing

Phillip Capital Research stated the company can build on the data centre tailwinds with four gigawatts of new build capacity worth some RM40bil in contract work awards anticipated over the next three years to come.

SunCon’s order book for construction works now stands at RM7.8bil, of which 52% or RM4.6bil is for five data centre jobs.

Phillip Capital has thus upgraded SunCon to a “hold” (from sell) and raised its target price to RM4.50 a share (from RM3.60 earlier) after raising its 2025 to 2026 earnings per share forecast for SunCon by 10% to 13%, as well as factoring in quicker progress recognition from ongoing data centre projects.

Source: The Star

https://www.thestar.com.my/business/bus ... on-showing