More wins to bolster Sunway Construction’s orderbook
KUCHING: Sunway Construction Group Bhd (SunCon) has done it again, nabbing RM140 million worth of new job awards, the group was lifted their total outstanding construction orderbook to a high of RM6.7 billion.
In a Bursa filing on Thursday, the group said they received an award from Ahmad Zaki Sdn Bhd for the substructure works at Bukit Bintang City Centre (BBCC) development in Kuala Lumpur for a total consideration of RM74.8 million.
With a project period of 10 months, its job scope involves earthworks, piling, diaphragm walls, RC works, and electrical works.
Additionally, the group also signed a letter of intent with Singaporean firm, Chui Teng Construction Co Pte Ltd, for the supply and delivery of precast components for building works at Clementi neighbourhood two.
The total contract consideration is 20.88 million Singaporean dollars or RM65.02 million.
According to Maybank Investment Bank Bhd (Maybank IB Research), the BBCC works are expected to provide a net profit contribution of RM5.7 million into FY18 while the precast supply to Singapore is expected yield a net profit contribution of RM9.8 million into FY19.
Despite the added earnings visibility for the group in FY19, Maybank IB Research is maintaining their earnings forecasts as they guide they have already imputed the group’s job win potential into their current forecasts of RM4 billion and RM300 million of FY17 job wins for construction and precast respectively.
Year to date, the groups 2017 job wins for construction and precast stands at RM3.7 billion and RM163 million respectively.
On the other hand, AmInvestment Bank Bhd (AmInvestment Bank) is raising their FY17, 18 and 19 earnings forecasts by 2.6, 2.0, and 1.5 per cent respectively to reflect the new job wins.
The banks new earnings forecasts for the group are RM3.9 billion in FY17 and a more normalised level of RM2 billion in FY18 and 19.
Looking forward, more wins are still expected of SunCon this year as MayBank IB Research details that the group is still eyeing for jobs from the Tun Razak Exchange (TRX), KL-Klang BRT and more packages from the ECRL.
“Into FY18, we believe in-house property developments form its parent, Sunway Bhd, would continue to support its job win replenishment,” affirmed the bank.
All in, both banks are positive on SunCon’s long-term prospects.
Maybank IB Research maintained their ‘buy’ call on the stock with a target price of RM2.63, while AmInvestment Bank maintains its ‘ Buy’ call with a raised fari value of RM2.70 from RM2.65.