PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is set to boost its regional footprint in the mechanised precast concrete sector with its plant in Singapore, analysts say.
SunCon has partnered with Hong Leong-affiliated HL Building Materials Pte Ltd in a joint venture known as HL-Sunway JV Pte Ltd to operate the plant in Singapore.
SunCon, through its subsidiary Sunway Concrete, holds a 49% stake in the joint venture, while HL Building Materials holds 51%.
The plant, said to be the largest integrated construction and prefabrication hub (ICPH) in Singapore, is expected to be capable of meeting around 12% to 14% of total project demand from Singapore’s Housing and Development Board (HDB) and is expected to have an annual production capacity of 100,000 cubic metres.
This translates to 48,000 cubic m of effective share for SunCon including the ability to supply precast components for up to 1,300 HDB flats.
In addition, SunCon operates two other precast plants in Johor, offering a combined annual capacity of 126,000 cubic m.
According to Phillip Research, SunCon is projected to deliver a three-year compounded annual growth rate in revenue and net profit of 15% and 26%, respectively, from this year to 2027.
The research house added that the plant’s utilisation stood between 30% and 40% in the first half of this year (1H25), owing to bottlenecks among HDB’s main contractors that delayed project delivery.
This resulted from a surge in activity that contributed to capacity constraints for Singapore’s main contractors, which is expected to normalise new launches as demand stabilises.
HDB expects that new launches will stabilise at an average of 15,000 units to 16,000 units between next year and 2027 as demand evens out.
The research house pointed out that the normalisation should ease delivery bottlenecks, potentially improving the utilisation level to around 60% to 70%.
Phillip Research said that the contribution from the precast segment will remain relatively modest, accounting for only 5% of revenue due to the group’s sizeable revenue base.
This is underpinned by SunCon’s core construction segment that is backed by a robust pipeline of data centre projects, which collectively account 45% of its RM6.7bil order book.
Looking ahead, the group is on track to meet its internal order book replenishment target of RM4.5bil to RM6bil this year.
The research house added that key risks to the overall valuation include potential delays in contract awards, stronger or weaker than expected order replenishments, quicker or slower order book recognition and margin pressures.
PhillipCapital has maintained a “hold” rating on SunCon with an unchanged target price of RM5.50.
