KUALA LUMPUR: Sunway Construction Group Bhd
(SunCon) rose in early trade after delivering strong quarterly results that beat earnings expectations.
The construction group rose 22 sen, or 3.49% to RM6.53 at 9.24 am. It has risen over 14% so far this year.
SunCon posted record FY25 results with net profit nearly doubling to RM361.8mil on 51.6% higher revenue of RM5.34bil, while 4Q25 earnings jumped 71.2% to RM118.4mil despite lower quarterly revenue due to margin improvements.
MBSB Research said SunCon’s cumulative FY25 performance delivered a record high core net profit of RM384.8mil, more than doubling that of FY24 and surpassing its forecast.
“This came in above expectations, exceeding our estimates by 11.1% and consensus by 12.4%,” it said.
The group declared a fourth interim dividend of nine sen per share, bringing total FY25 dividends to 50.5 sen per share, translating into a yield of about 8%.
“We are maintaining our ‘buy’ call on SunCon with an upgraded target price of RM7.18, supported by its strong fundamentals, resilient balance sheet, and promising growth prospects in the construction sector.
“SunCon continues its focus on the data centre (DC) construction segment, a key earnings driver, with 40.1% of its current RM5.70bil order book dedicated to DC projects,” MBSB said.
The research house said beyond the ATF segment, the group is diversifying into large-scale infrastructure, renewable energy projects, and private finance initiatives, while continuing to build on its track record in commercial and in-house works from Sunway Bhd.
“We are raising our FY26E and FY27F earnings forecasts by 31.6% and 25.7%, respectively, on the back of stronger margins, and are introducing our FY28F earnings projections.
“Hence, we also raise our target price to RM7.18, pegging SunCon’s revised FY26F EPS of 31.2 sen to a PER of 23 times, which is one standard deviation above its five-year mean,” MBSB said.
Meanwhile, RHB Research said SunCon’s FY25 core net profit of RM425mil, up 148% year-on-year, exceeded expectations, accounting for 123% of its forecast and 124% of street estimates.
As the results outperformed expectations, RHB Research said it is raising its FY26 job replenishment assumption to RM6bil, in line with SunCon’s target, from RM5.5bil, which lifts its FY26-27F earnings forecasts by 13% and 14%, respectively, after housekeeping adjustments. It has also introduced FY28F earnings, assuming new job wins of RM4.5bil.
The research house revised its target price to RM7.96 from RM7.35, incorporating a 4% ESG premium (previously 6%), with the valuation pegged to FY26F EPS at an unchanged target P/E of 23.5 times.
“A key rerating catalyst, aside from new data centre wins, would be if SCGB secures any packages from the Penang Light Rail Transit project, given that its last major infrastructure contract was the RTS Link packages 1B and 5 awarded in March 2023. The key downside risk is lower-than-expected job wins.”
