Secures New Order Worth RM721mn  

SUNCON has secured a RM721.0mn contract from Sunway Lost World Water Park Sdn Bhd, an indirect subsidiary of Sunway Berhad (SUNWAY). The project primarily involves piling, earthworks, sub-structure, and main building works for Sunway Ipoh Mall, a six-floor shopping complex with cinema and parking facilities located in Perak.

The project will take 35 months to complete and is expected to be completed by January 2027.

Our View

With this fourth construction project secured in 2024, SUNCON has accumulated a YTD total of RM831.1mn in contract wins, as illustrated in Figure 1. Taking these recent wins into account, our estimate indicates that SUNCON's current total outstanding order book is approximately RM6.1bn, equivalent to 2.3x FY23 revenue.

Assuming a PBT margin of 7%, we estimate this project should contribute a net profit of RM38.4mn throughout the construction period.

Impact

Maintain FY24 to FY26 earnings forecasts as the job win is within our FY24 order book replenishment assumption of RM2.8bn.

Valuation

We reiterate our target price of RM2.76, based on unchanged PER 18x CY25 EPS. Maintain a Hold call on the stock.

Source: TA Research - 22 Feb 2024