PETALING JAYA: Sunway Construction Group Bhd
’s (SunCon) near-term earnings are expected to be backloaded as half of the order book remains at the early stage of the S-curve, says Phillip Capital Research.
In a note, the research house also pointed out the absence of contributions from JHB1X0 – a RM4.1bil data centre campus located in the Sedenak Tech Park, Johor.
It was previously reported that JHB1X0 had reached 98.7% completion as at end-March 2026.
Phillip Capital Research said that SunCon’s year-to-date contract wins have reached RM4.3bil, lifting its outstanding order book to RM8.8bil.
This met 72% of its 2026 replenishment target, with new customers accounting for 41% of total contract wins.
“Looking ahead, the Serendah data centre is expected to become a meaningful earnings contributor from 2027, while JHB01 and Shell 1 remain on track for completion.
“Precast deliveries should provide modest support to revenue recognition over the interim.
“Overall, we forecast a three-year earnings compound annual growth rate of 3% over 2026 to 2028.”
Currently, the research house said that SunCon is working on 10 data centre packages. These include Serendah full-scope construction, K2 Building 4, JHB1X0 tenant improvement and piling works, JHB01 core-and-shell works, and multiple general contracting or project service request scopes.
These projects account for 67% of SunCon’s outstanding order book, providing strong medium-term earnings visibility.
“Looking ahead, management sees a RM12bil replenishment pipeline from six existing and one new client, comprising follow-on packages, campus expansions, and subsequent mechanical, electrical and plumbing and fit-out works.
“Supported by AirTrunk’s additional RM12bil investment across two Johor campuses (280 megawatt capacity), we believe SunCon remains well positioned to secure a meaningful share of the estimated RM8.4bil to RM9.8bil addressable opportunity.”
“Given SunCon’s established track record in data centre construction, existing relationships with major hyperscale clients, and capabilities across multiple stages of the construction value chain, we believe the group remains well positioned to secure follow-on awards from existing campuses as well as new developments, supporting its medium-term order book replenishment.”
As for the precast segment, Phillip Capital Research said sustained deliveries should accelerate recognition of SunCon’s RM725mil precast order book through 2026.
That said, it expects the segment to contribute a relatively modest, about 3% of group revenue, given SunCon’s sizeable construction operations.
The research house also added that internal projects from the Sunway Group, including malls and hospitals, could provide further upside to SunCon’s contract replenishment.
Phillip Capital Research has reiterated its “hold” call on the SunCon stock with a 12-month target price of RM7.83.
The research house said it remains constructive on SunCon’s long-term growth prospects, supported by a healthy data centre pipeline and robust order-book replenishment opportunities.
“However, we believe much of the near-term earnings upside has already been priced in.”
