MRT3 jobs to strengthen SunCon’s orderbook

KUCHING: Sunway Construction Group Bhd’s (SunCon) prospects have been viewed favourably by analysts due to its high likelihood that it will clinch jobs under the Mass Rapid Transit 3 (MRT3) project.

In a report, RHB Investment Bank Bhd’s research team (RHB Investment) said: “We continue to favour SunCon amid the high likelihood that it will clinch jobs related to the elevated portion of the MRT3 project.

“Aside from that, the group’s listed parent should continue to support its earnings visibility – 51 per cent of its orderbook comes from internal building contracts from its parent company.”

It noted that SunCon’s orderbook stood at RM4.8 billion as of December, 31 2021, which translates into an orderbook/ cover ratio of three-folds, based on FY21 construction revenue.

“Although we note that SunCon has not won any new jobs YTD, its job replenishment could come from MRT3 project awards, which are expected to be dished out later in 4Q22.

“Recall that for MRT2, SunCon secured a total of RM1.4 billion worth of jobs for the elevated works portion in 2016 and 2017.

“Under MRT3, the Ministry of Transport guided that the elevated works portion is expected to make up 80 per cent of the MRT3 alignment.

“We estimate that the total job value of the elevated works could be in the range of circa RM15 to RM20 billion, by applying the same cost per km assumed for MRT2.

“As such, there are ample opportunities for elevated works, and we believe that SunCon is a frontrunner to win jobs for the elevated portion of MRT3,” RHB Investment said.

All in, it maintained its ‘buy’ call on the stock based on its promising prospects driven by the MRT3 project.

The group’s listed parent should continue to support its earnings visibility – 51 per cent of its orderbook comes from internal building contracts from its parent company.