The PETALING JAYA According to RHB Research, Sunway Construction Bhd’s expansion into industrial work, mostly in data centers, will lessen the risks associated with projects involving public infrastructure.
For the time being, the group’s internal jobs segment’s primary source of income is the South Quay Square (SQS) project in Bandar Sunway.
According to RHB Research, the project, which consists of two office towers, a shopping center, and a university, will contribute around 16%, 16%, and 7%, respectively, to the group’s pre-tax profit in the fiscal years 2023 (FY23), FY24, and FY25.
According to the research company, in June 2019 Sunway Construction received the first RM119 million work package of the SQS project for piling work.
It obtained an RM284 million contract in August 2020 for the project’s primary construction. In December 2021, the total contract value was revised to RM756mil.
It added new contracts of RM607 million in April, bringing the total to RM1.3 billion from RM756 million.
“At the end of the first quarter of 2023, the project’s order book had an unbilled balance of RM1.1bil, with 15% to 16% completion. At 48%, this is the largest internal order, according to RHB Research.
According to the research organization’s calculations, internal orders from its parent business, Sunway, accounted for around 39% of its total order book, which totaled RM6.1 billion.
The stock has a “buy” call from RHB Research with an RM2.05 per share target price.
It claimed that Sunway Construction’s order book/revenue cover of about 3.1 times and the consistent job flow from its parent business warranted its unchanged valuation target of 15.5 times.
