PETALING JAYA: With a robust pipeline of contracts, Sunway Construction Group Bhd
(SunCon) is on track to deliver strong results in the fourth quarter of 2024 (4Q24), says MIDF Research.
The research house noted that the construction group’s total outstanding order book stood at RM7.07bil as of September last year, with RM3.97bil secured so far in the financial year 2024 (FY24).
“This reinforces our confidence in SunCon’s strong execution capabilities and its potential to deliver sustained earnings growth, setting a positive tone for FY25,” it said in a report.
The group’s 4Q24 results are slated to be released on Feb 20, 2025.
“We anticipate the core net profit for 4Q24 at RM54.6mil to RM63.6mil (versus RM49.8mil in 4Q23 and RM44.1mil in 3Q24), excluding unexpected fluctuations in cost structure and one-time items.
“This projection is grounded on an estimated revenue of RM708.6mil to RM857.7mil in 4Q24, assuming both core net profit and revenue contribute 95%-100% to our full-year FY24 earnings estimates,” the research house said.
The JHB1X0 data centre project is expected to be a significant revenue and profit driver for SunCon in 4Q24, with progress billings contributing to the quarter’s results.
“Although there have been recent concerns surrounding data centres due to exports restrictions on AI (artificial intelligence) chips, SunCon’s management, in close communication with its clients, has reported no adverse feedback.
“Clients remain confident in their plans, and no delays are expected for secured contracts,” MIDF Research said.
According to the research house, SunCon is on track to hit its order book replenishment target of RM4bil to RM5bil for FY24.
Although not all projects will yield immediate revenue recognition in 4Q24, the company’s diversified portfolio and phased progress across contracts ensure steady billing contributions, further solidifying its earnings outlook.
The continued execution of these projects highlights SunCon’s operational strength and positions it well to achieve sustained financial performance heading into FY25, the research house said.
It anticipated enhanced core earnings on both an annual and quarterly basis, attributed to declining raw material input costs (steel and cement) and supplemented by bottom-line margin improvements.
According to the MIDF Research, the monthly average prices of steel bars in Malaysia softened for the second consecutive month as of Dec 31, 2024.
“Based on the prices of steel bars quoted through channel checks in the market, the average price declined -4.66% month-on-month in December last year to RM2,443.25 per tonne.
“Additionally, the monthly average price for cement has remained unchanged for the 18th consecutive month since July 2023, holding steady at RM380 per tonne of bulk cement.
“This prolonged price stability is attributed to a balanced supply-demand dynamic in the market and consistent raw material costs,” it added.
MIDF Research anticipated a one sen per share dividend payout in 4Q24, bringing the total dividend per share to seven sen for FY24.
It kept its “buy” call on SunCon with a target price of RM4.46 per shared, pegging its FY25 earnings per share of 18.6 sen to a price-earnings ratio of 24 times, which is one standard deviation above its five-year mean.
Shares of SunCon closed at RM4 last Friday, down 13.6% year-to-date.
