PETALING JAYA: Sunway Construction Group Bhd
’s (SunCon) RM6bil order book replenishment target for the financial year ending Dec 31, 2026 (FY26) is expected to be on target despite the uncertainties from rising costs due to the Middle East conflict.
The company announced last Friday that it secured a data centre (DC) project on a cost-plus basis worth RM1.75bil in Serendah, Selangor, from a foreign firm offering hyperscale cloud computing services.
This brings SunCon’s total order book to RM8.7bil, with total contracts for FY26 at RM2.9bil after securing two DC projects in February worth RM1.15bil from a US multinational company.
Analysts covering the company remained positive on its outlook, with BIMB Research viewing the rate of order book replenishment this year “as firmly on track, supported by an active DC tender pipeline and sustained hyperscale demand”.
BIMB Research has maintained a “buy” recommendation on the stock with an unchanged target price (TP) of RM7.64, noting that the latest win reinforces its conviction that the company remains a key beneficiary of structural DC growth.
MBSB Research, which has maintained a “trading buy” on the stock but raised the TP to RM7.68 from RM7.30, said the company’s balanced mix of cost-plus versus fixed price at a ratio of 50:50 supports resilience, with limited direct fuel exposure as subcontractors largely bear the diesel costs
.While the research house has trimmed FY26 and FY27 earnings by 3% respectively after factoring in building material cost pressures, it still translates to a net margin of 8%, a one percentage point improvement from FY25.
“Despite the uncertain geopolitical backdrop, we remain optimistic on SunCon given its strong exposure to the structurally booming DC projects,” it said, adding that the order book profile positions the company to ride the “second wave” of DC projects, given that these projects now make up 60% of the outstanding order book.
Kenanga Research said the latest project underscores the company’s competitive edge in securing high-stakes contracts from global hyperscalers.
“Notably, DC projects typically yield higher margins, reaching the upper end of SunCon’s 5% to 8% guided profit before tax range,” it said.
The research house, which has maintained an “outperform” call and unchanged TP of RM7.76, said the company maintains a robust pipeline, actively participating in DC tenders for six other clients, comprising four existing and two new clients.
“In total, its active tender book remains elevated at RM16bil across both DC and non-DC segments.
“Other key pipeline prospects include the Penang LRT Package 2 and recurring in-house jobs from the Sunway Group,” it said.
Hong Leong Investment Bank Research has maintained a “buy” call but raised the TP to RM9.10 from RM7 and has increased the order book replenishment assumption to RM8bil from the company’s target of RM6bil.
The earnings forecast has been raised by 26% for FY26 and 15% for FY27.
It believes another RM5bil worth of projects can be secured this year backed by sizeable conversion or upsizing opportunities from its existing clients for DC projects as well as hospital and transit-orientated development projects from the Sunway Group.
RHB Research, which has maintained a “buy” call and TP of RM7.96, expects upsizing works in the wake of the latest project, as previous DC jobs secured entailed some form of upsizing.
“Interest on DCs in Malaysia is expected to continue, as hyperscalers are now more cautious on such investments, in light of the Middle East conflict,” it said.
