MIDF Research said SunCon will be among the main beneficiaries of the rise in data centres in Malaysia.
PETALING JAYA: Sunway Construction Group Bhd
(SunCon) remains a favoured company within the construction sector, given the group’s strong outstanding order book and its active participation in various tenders.
MIDF Research in a report said SunCon will be among the main beneficiaries of the rise in data centres in Malaysia.
“The group is working on two such projects at the Sedenak Tech Park in Johor.
“SunCon is also expected to benefit from the development initiatives lined out under Budget 2024 and the Mid-Term Review of the 12th Malaysia Plan and other off-budget projects such as the Mass Rail Transit 3 (MRT3).”
Hong Leong Investment Bank (HLIB) Research noted that SunCon’s latest outstanding order book stands at RM5.3bil.
“Financial year 2023 (FY23) job wins of RM2.5bil matched our expectations but beat management’s target. In FY24, SunCon is poised to grow its annual replenishment to RM2.5bil to RM3bil, higher than its typical RM2bil target.
“Making up its RM2.5bil to RM3bil target are the RM1bil internal projects, with the remaining RM1.5bil to RM2bil from external projects such as data centres, precast, warehouses and factories.”
HLIB Research said it expects to see some contracts flowing in by the first quarter of SunCon’s FY24.
“Additionally, we see multiple upside risks to management’s conservative target, given that projects like the Free Commercial Zone in Iskandar Puteri (Phase 1 to be completed by 2025), mixed development Cochrane project, MRT3 and Song Hau 2 power plant were not included.
“This adds to opportunities coming on top of a vibrant data centre market.”
For the fourth quarter ended Dec 31, 2023, SunCon’s net profit rose to RM49.27mil from RM45.65mil in the previous corresponding period, while revenue increased to RM871.50mil from RM503.43mil previously.
Basic earnings per share stood at 3.82 sen versus 3.54 sen a year earlier.
SunCon said its earnings for the quarter were driven by improvements in its construction and precast segments.
The group declared a second interim single-tier dividend of three sen per ordinary share, to be paid on April 9.
For FY23, SunCon’s net profit grew to RM145.11mil from RM135.18mil in the previous corresponding period, while revenue improved to RM2.67bil from RM2.16bil.
Kenanga Research said SunCon’s FY23 core profit of RM170.1mil beat its forecast and consensus estimates by 25% and 22%, respectively.
“We expect a significant revitalisation of the construction sector in 2024, backed by the rollout of the RM45bil MRT3 project, the RM9.5bil Bayan Lepas Light Rail Transit (LRT) and six flood mitigation projects reportedly to be worth RM13bil; as well as the vibrant private sector construction market.”
It noted that the construction sector will be backed by massive investments in new semiconductor foundries and data centres.
“SunCon is eyeing opportunities in data centre building jobs, MRT3 and Bayan Lepas LRT work packages, as well as contracts from parent and sister companies.”
