Sunway Construction a strong contender for infra projects

KUCHING: Sunway Construction Group Bhd (Sunway Construction) has been projected to be a strong contender for infrastructure projects moving forward given its proven ability to compete under open bidding and strong balance sheet, but some analysts opine that many headwinds still persist for the group.

AmInvestment Bank Bhd (AmInvestment Bank) gathered that Sunway Construction’s internal target of job wins (including the supply of precast products) is RM2 billion in financial year 2022 (FY22F).

“Currently, its outstanding construction and precast product order backlogs stand at RM4.8 billion (construction at RM4.3 billion and precast at RM0.5 billion),” the research firm recapped following its recent engagement with the company.

“We maintain our overall order book replenishment assumption of RM1.7 billion annually in FY22– 24F.

“We believe that Sunway Construction is a strong contender for infrastructure projects moving forward given its proven ability to compete under open bidding and strong balance sheet. “Potential replenishment includes internal building jobs from its parent and sister companies under the Sunway Group and the above-ground portion of the MRT3 in the fourth quarter of FY22 (4QFY22).”

AmInvestment Bank also gathered that the tender process for the MRT3 has begun with jobs expected to be awarded in 4QFY22.

“If there are no delays in land acquisition and sukuk issuance by MRT Corp to fund the project, advanced works could commence as early as 1QFY23.”

The research firm also expects Sunway Construction’s precast segment to contribute positively as construction activities in Singapore are normalising.

“The commissioning of Sunway Construction’s 49 per centowned integrated construction and prefabrication hub (ICPH) precast plant in Singapore in 3Q22 (which will increase its annual precast capacity from 126m3 to 200m3) will also improve FY23F earnings.

“According to Singapore’s Housing and Development Board, the supply of new build-to-order flats is projected to be ramped up to 23,000 per year in 2022 and 2023 (from 17,000 in 2021).”

On the other hand, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) felt that many headwinds still persist for the group.

Potential replenishment for Sunway Construction includes internal building jobs from its parent and sister companies under the Sunway Group and the above-ground portion of the MRT3 in 4QFY22.