KUALA LUMPUR: BIMB Securities Research has reaffirmed its Buy call for Sunway Construction (SunCon) and raised the target price from RM 1.12 to RM1.52.
It said on Monday the new target price of RM1.52 was based on 14 times price-to-earnings ratio (PER) over earnings per share for FY16.
Last Friday, SunCon announced it had secured a RM1.6bil project from Putrajaya Holdings Sdn Bhd for the construction of government office buildings in Putrajaya.
“We are pleasantly surprised with the amount as we did not expect it to come in as a single package. Inclusive this contract, SCG has successfully secured a total of RM2.2bil worth of projects, exceeding ours and management expectations of RM1.5bil and RM2bil respectively,” it said.
BIMB Research said following the fresh news, it raised the FY15/16 forecast by 6.2% and 6.3% and this saw it deriving a new target price of RM1.52 (from RM1.43).
With this project, SunCon has secured RM2.2bil worth of projects year-to-date, hence pushing its outstanding order book to approximately RM4.3bil and this should give them busy for the next three years.
“Assuming a profit before tax margin of around 8%, the project’s pre-tax profit should be around RM128.8mil.
“We retain our positive view on SunCon with expectation to i) an advantage in the construction package of LRT3 and MRT II, ii) a dominant role in BRT project, iii) strong earnings visibility, iv) an attractive dividend, and v) to continuously get supports from Sunway Group,” it said.
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