PETALING JAYA: Sunway Construction Group Bhd
’s (SunCon) earnings prospects continue to be supported by strong fundamentals, a resilient balance sheet and promising growth drivers in the construction sector.
Chiefly, the data centre (DC) construction segment remains the group’s key earnings driver, with 40.1% of its current RM5.7bil order book dedicated to DC projects.
SunCon’s earnings for the fourth quarter of financial year 2025 (4Q25) largely came in above analysts’ expectations.
MBSB Research said the group recorded a core net profit of RM119.2mil, representing an 84.6% year-on-year (y-o-y) growth in 4Q25, lifted by stronger performances from the construction and precast businesses.
For the cumulative 12-month performance of financial year 2025 (FY25), SunCon posted a record-high core net profit of RM384.8mil, doubling that of FY24.
“This came in above expectations, exceeding our estimates by 11.1% and consensus by 12.4%. It declared a fourth interim dividend of nine sen per share, bringing the total dividend for FY25 to 50.5 sen per share, or a yield of 8%,” the research house said in a report yesterday.
Rakuten Trade head of equity sales Vincent Lau said that at current valuations, the stock is fairly priced.
He added that the company still has some room to grow, underpinned by its strong order book and tender book.
“The stock is not overvalued as the company’s order flows are still very strong.
“DC-related jobs make up more than 40% of the order book. The group’s project execution has been good.
“The only potential risk for SunCon is if there are delays in construction, leading to slowdowns in some quarters.
“However, while it cannot be entirely ruled out, this risk is unlikely to materialise as there are no material shortages, all necessary approvals are in place, and the company is well managed,” he told StarBiz.
SunCon saw a 30.5% y-o-y reduction in 4Q25 revenue, due to the accelerated progress of the RTS Link and several DC projects in the same quarter a year ago.
MBSB Research noted that despite this, the company’s pre-tax profit came in stronger at RM155.3mil, mainly due to a recalibration in margins reflecting cost savings from accelerated progress in certain DC projects.
As at December 2025, SunCon’s outstanding order book stood at RM5.67bil, providing strong earnings visibility up to FY27.
The bulk of the projects are internal jobs from Sunway Group, worth RM2.42bil (42.6%), followed by DC projects at RM2.3bil.
Furthermore, FY25 saw the group securing RM5.21bil of new jobs, which is 86.8% of the higher end of its replenishment target of RM4.5bil to RM6bil.
“Management has set a replenishment target of RM6bil for FY26, which is achievable in our view. The active tender book currently stands at RM17.5bil, including more than 700MW of DCs and public infrastructure tenders,” the research house said.
MBSB Research maintained its “buy” call on SunCon with a higher target price (TP) of RM7.18 (from RM6.53), pegging SunCon’s revised FY26 earnings per share (EPS) of 31.2 sen to a price-to-earnings ratio of 23 times – one standard deviation above its five-year mean.
Hong Leong Investment Bank (HLIB) Research said it anticipates a resumption in the DC award cycle once the tender evaluation period ends (three to five months).
The research house noted that several critical tenders for multiple DCs remain outstanding, some from high-certainty existing clients.
HLIB Research also maintained its “buy” call, raising its TP to RM7 from RM6.35.
Its TP is derived by pegging FY27 EPS to 20.1 times (unchanged), based on 0.5 standard deviation over the three-year range, including an assumed net cash per share of 40 sen.
“In our view, SunCon’s premium valuation is justified given superior earnings delivery, as well as solid prospects and return-on-equity (30% to 40%). Downside risks include slower wins in the DC space.”
