KUALA LUMPUR: Maybank Investment Bank Research has downgraded Sunway Construction (SunCon), whose share price has jumped 52% since early 2017, to a Hold.
It said on Tuesday, that continuous job wins in FY17 have seen SunCon’s outstanding orderbook hit a record high of RM6.8bil.
Maybank Research pointed out the share price has done well, up 52% since the beginning of 2017, from the euphoria of orderbook replenishment.
“With the share price having reached our target price of RM2.63, pegged to 16 times FY18 price-to-earnings ratio (PER), we downgrade SunCon to a hold. Stronger-than-expected earnings delivery and/or job wins in FY18 could be a further re-rating catalyst,” it said.
SunCon had a phenomenal year, securing RM4bil of new jobs (including precast) to bring its outstanding orderbook to a record high of RM6.8bil as at end-September 2017 (including KVLRT 3).
Its single largest job win was the KVLRT 3 package GS07-08 worth RM2.2bil, awarded in October 2017.
“Moving into 2018, SunCon has set an internal target of RM2bil of job wins. We believe this could come from TRX and property developments within the Sunway Group,” it said.
SunCon has also teamed up with IJM and another two private contractors to bid for the project-delivery-partner role for the KL-Singapore high speed rail (HSR) civil infrastructure works (Malaysian portion).
“After the euphoria of order book replenishment in 2017, translation of order book to net profit growth will be in focus in FY18.
“Based on our current forecast, we expect on-year net profit growth of 45% in FY18 (three year CAGR of 19% from FY15-18E). We have assumed a conservative RM1.5bil of job wins for FY18E,” said Maybank Research.