SunCon poised to surpass FY17 target for job wins

KUCHING: Sunway Construction Group Bhd (SunCon) is poised to surpass it financial year 2017 (FY17) target for job wins, based on its recent new jobs.

Following a company visit, the research arm of AmInvestment Bank Bhd (AmInvestment) said it came away feeling more upbeat on the company’s prospects.

“SunCon appeared confident that its FY17 job wins will surpass its initial target of RM2 billion by a huge margin.

“Year to date (YTD), SunCon has bagged new jobs worth RM1.6 billion, including the RM582 million government servant housing project PP1AM to build 2,160 units of apartments in Kota Bharu secured recently.

“SunCon is particularly bullish in the rail-related space, as well as internal projects from parent Sunway Bhd,” it said.

Of note, SunCon, via its subsidiary Sunway Construction Sdn Bhd ( SCSB) secured a contract with Liziz Standaco Sdn Bhd for the proposed construction and completion of 1 Malaysia Civil Servant Housing ( PPA1M) in Kelantan.

According to its filing on Bursa Malaysia, the contract is worth RM581 million and it is expected to be completed by the first quarter of 2020. Upon securing the contract, SunCon’s outstanding order book as to date, amounts to RM4.7 billion.

“For FY18 to FY19 forecast, SunCon reiterated its guidance for annual job wins normalising to RM2 billion underpinned largely by internal contracts from parent Sunway Bhd comprising building jobs for new property launches, and up to five new hospital projects, and external jobs from key mega infrastructure projects such the HSR, ECRL and MRT3,” AmInvestment noted.

Meanwhile, SunCon is awaiting the outcome of its tender, via a 50: 50 joint venture with a Singaporean partner, for an integrated construction precast hub ( ICPH) yard in Pulau Punggol Barat in Singapore which should be made known by mid-2018.

“SunCon intends to build on the yard a fully automated robotic precast plant with an annual capacity of 300m3 (compared with its total capacity of 156.6 m3 in Iskandar and Senai at present).

“SunCon guided for a capex of S$ 40 million to S$ 60 million ( RM120 million to RM180 million) for the venture, which it has no problem funding, given its net cash of circa RM360 million as at end-1HFY17.

“The new plant, which takes about three years to be completed, will ride on the growing demand for precast products in Singapore, driven by government initiatives with the latest being mandatory requirement for prefabricated bathrooms in new HDB flats by 2019,” it explained.

In a separate report, the research arm of Kenanga Investment Bank Bhd ( Kenanga Research) highlighted that currently, SunCon’s outstanding order-book stands at RM4.7 billion providing earnings visibility for the next two to three years.

“We believe SunCon is on track to meet their and our order book replenishment targets of RM2 billion, given that it has already secured RM1.6 billion worth of jobs YTD excluding its MRT2 station works, which is expected to be lumpy.

“We are also expecting SunCon to at least bag a package of civil works from LRT3,” it opined.