SunCon on track for a stronger finish to FY21
KUCHING: Sunway Construction Group Bhd (SunCon) is on track for a stronger finish for the financial year 2021 (FY21) with productivity levels normalising close to pre-pandemic era, further buoyed by acceleration of its Indian projects, analysts observed.
“We also expect a continuation of earnings boost in the next quarter from recognition of conservatively recognised projects that have reached advanced phases (similar to 3Q21).
“Despite pandemic enforced restrictions affecting sector productivity levels in general, management indicates that productivity levels have normalised close to pre-pandemic era after two years of ‘learning to live with Covid’.
“We are comforted by this but at the same time remaining cautious due to slow fresh foreign labour intake developments and potential for case resurgence over the course of 2022,” the research team at Hong Leong Investment Bank Bhd (HLIB Research) opined in a report.
It also pointed out that SunCon is on track for a stronger earnings performance in the coming quarters as pandemic disruption normalises.
“We gather that the recent poor weather and flooding (4Q21) has spared the group’s construction projects. Case in point, progress for the LRT3 package in Klang was not affected as structure intensive phase has passed,” it said.
Meanwhile, it noted that billings from its two HAM projects in India (RM823 million) should accelerate in FY22; indications are that execution rate has ramped up by four-folds in January 2022 compared with December 2021.
Completion rates for both projects are targeted to be circa 50 per cent by year end (as at 3Q21: negligible).
“The country is undertaking an infrastructure drive featuring vast road and rail network expansion which bodes well for SunCon in the long term.
“The company is looking to participate in HAM road projects should there be no domestic PFI opportunities in 2022.
“We are unperturbed by its participation in balance sheet intensive projects due to likely financed through 60 per cent owned JV SunCon-RNS; mitigates outlay and better deployment of capital (an estimated RM615 million idle cash including investments),” it said.