PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is well positioned for another year of strong earnings growth, supported by a record order book, robust data centre (DC) construction demand and a steady pipeline of internal jobs from parent Sunway Bhd, says UOB Kay Hian (UOBKH) Research.
Maintaining its “buy” call with a target price of RM7.88, the research house said SunCon’s growth trajectory remained intact after the company secured an additional RM664.4mil in change orders for two Johor DCs, lifting their combined contract value to about RM865.6mil.
The research house said SunCon’s outstanding order book had reached a record RM8.8bil, while new contract wins of about RM4.2bil year-to-date put the company well on track to achieve management’s RM6bil order-book replenishment target for 2026.
“Management previously targeted to secure a RM6bil order book in 2026, which we opine is highly attainable, well supported by accelerating local infrastructure job flows and DC-related contracts,” it said.
The research house expects earnings to remain underpinned by an extensive tender pipeline worth RM13bil to RM14bil, with potential opportunities including multiple DC contracts worth RM4bil to RM6bil, around RM1bil of internal projects from Sunway Bhd, and public infrastructure works such as the Penang light rail transit and mass rapid transit three civil packages.
DCs continue to be the key earnings driver. SunCon had secured three DC contracts worth RM2.94bil in 2025 and another RM4.2bil so far this year.
The company currently has three completed and 10 ongoing DC projects with a combined 450MW IT load, with DC jobs accounting for about 70% of its outstanding order book.
More significantly, over 90% of its RM15.3bil tender book comprises DC-related projects, while the company is bidding for projects with a combined IT load exceeding 800MW, representing an estimated contract value of RM14bil to RM15bil that could be awarded over 2026 and 2027.
Besides external contracts, UOBKH Research expects SunCon to replenish about RM1bil of orders from Sunway Bhd this year, driven by projects including Sunway Medical’s expansion, new property launches, healthcare capacity expansion and refurbishment of hotels and malls.
It also highlighted SunCon’s strong balance sheet, noting the company had about RM1.2bil in net cash.
This supports projected dividend payout ratios of 100% to 143% between 2026 and 2028, translating into prospective dividend yields of 4.8% to 6.5%.
It added that the healthy cash position also leaves room for potential special dividends as management optimises capital allocation. It maintained its earnings forecasts, saying SunCon’s record order book, expanding DC exposure and recurring internal projects provide visibility for sustained multi-year growth.
