PETALING JAYA: Sunway Construction Group Bhd
(SunCon) is expected to sustain its strong order-book momentum, supported by continued data centre (DC) spending and a healthy pipeline of new contracts.
Its earnings growth is also expected to strengthen as major DC projects move into higher-billing phases, while internal jobs from parent Sunway Bhd provide additional visibility.
Phillip Capital Research, for one, noted that the approval of an additional five gigawatts of DC electrical supply capacity by Malaysia’s Data Centre Task Force or DCTF would translate into an estimated RM40bil annual construction opportunity by end-2028.
“With SunCon’s dominant exposure to the DC segment, we believe the group is well positioned to capture the incremental opportunity,” the brokerage highlighted.
Phillip Capital Research said its annual RM7bil order-book replenishment target for 2027 to 2028 would require SunCon to capture 18% of the total opportunity, which it viewed as achievable while leaving room for execution slippage or variations in the annual award pipeline.
SunCon has secured RM6.9bil of new wins year-to-date, achieving 76% of Phillip Capital Research’s RM9bil 2026 replenishment target. Its order book stands at RM10.5bil, comprising three large DC projects that are expected to see higher progressive billings from the fourth quarter of 2026 (4Q26).
“We, therefore, expect upcoming 3Q26 earnings to remain broadly flattish quarter-on-quarter,” said Phillip Capital Research, adding that the near-term pipeline remained intact, with potential upside from Sedenak projects and remaining Bukit Serendah packages.
Sunway Group, meanwhile, continues to provide a steady source of in-house jobs, with RM400mil secured against SunCon’s RM1bil 2026 target.
The potential near-term pipeline includes Sunway Medical Centre Seremban Sentral, a hospital project expected to be worth RM200mil to RM300mil.
Phillip Capital Research reiterated its “buy” rating on SunCon with a 12-month target price of RM9.32, based on an unchanged 22 times 2027 estimated earnings per share or EPS.
“We like SunCon for its strong order-book replenishment, coupled with its dominant DC exposure, which makes it our preferred DC construction proxy.”
UOB Kay Hian (UOBKH) Research, on the other hand, upgraded SunCon to a “buy”, while maintaining its RM8.44 target price, pegged to 21.6 times 2027 forecast price-to-earnings (PE). It said the recent share price retracement had prompted the upgrade, while SunCon’s implied dividend yield of 4.8% to 6.5% for 2026 to 2027, based on 100% dividend payout assumptions, remained appealing.
UOBKH Research said SunCon’s RM10.5bil order book represented 1.7 times order book cover, while its tender book exceeded RM14.2bil.
“We remain optimistic that the group’s RM7bil to RM9bil order-book replenishment target in 2026 is highly attainable, well supported by DC-related contracts,” it said.
The research house expects earnings growth of 8% to 29% during 2026 to 2028, supported by potential contracts including RM4bil to RM6bil of DC projects, RM350mil to RM500mil of residential contracts linked to the Rapid Transit System transport- oriented development or RTS TOD at Bukit Chagar in Johor, RM2bil to RM3bil of internal Sunway projects and about RM1bil of precast orders.
SunCon may also secure civil packages for the mass rapid transit three or MRT3, with UOBKH Research noting its past track record and landbank acquisition expected to be completed by end-2026.
DC projects account for about 70% of SunCon’s outstanding order book, while more than 80% of its RM14.2bil tender book is DC-related.
The group is also bidding for several DC projects with a combined IT load of more than 700 megawatts, estimated at RM11bil to RM13bil, which could be awarded during 2026 to 2027.
One analyst told StarBiz that SunCon’s prospects remained positive as the company is in a good position to benefit from strong DC demand, while its sizeable order book provides better earnings visibility as projects move into higher construction phases.
“Beyond DCs, the group’s pipeline of infrastructure, property and internal projects should provide another layer of support for order replenishment and earnings growth over the coming years,” he said.
