PETALING JAYA: Despite the gloomy prospects for the global and domestic economies, Tan Sri Dr Jeffrey Cheah, founder and chairman of the Sunway group, sees the local construction sector as “booming”.

“The construction sector is booming. The government is pouring in ... RM260 billion over the next five years. It is a good entry point for investors into the construction sector,” said Cheah at the launch of Sunway Construction Bhd’s (SCB) prospectus yesterday.

He said the group is confident of securing an additional RM2 billion worth of projects by year end, focusing on large-scale and complex projects.

Cheah said SCB’s order book stood at RM2.8 billion as at March 31 this year, of which over 30% was in housing development while the rest in the renewal of mass rapid transit (MRT) and light rail transit (LRT) projects, and other projects in Sunway Iskandar, Johor.

SCB has a tender book of slightly below RM10 billion as at the first half of 2015, but expects it to increase to at least RM20 billion by year end with more upcoming LRT and MRT projects.

The company can also look forward to internal projects as its parent, Sunway Bhd, has a remaining land bank of 3,500 acres (1,416ha) with a gross development value of RM50 billion.

Cheah believes the booming construction sector will provide opportunities for SCB.

“As the largest pure construction play in Malaysia upon listing, SCB will be able to capture the profusion of opportunities arising from initiatives under the 11th Malaysia Plan,” Cheah said.

He also said the Sunway group has plans to list some of its other businesses after the initial public offering of SCB.

“We do have [plans], but cannot reveal [them] offhand,” he said.

“We like to share our successes with the public and shareholders,” he said, adding that the group owns 12 businesses ranging from quarry to property.

SCB has set a dividend policy of paying out 35% of its annual core profit once it is listed, according to its prospectus.

For the financial year ended Dececember 2014 (FY14), SCB achieved an 88.8% jump in profit to RM124.77 million from RM66.1 million with a 6.6% profit margin compared with 3.6% in the previous year.

Revenue grew 2.2% to RM1.88 billion for FY14 from RM1.83 billion in FY13. Earnings per share came in at 9.7 sen versus 5.2 sen the year before.

SCB is set to list on the Main Market of Bursa Malaysia on July 28 with a retail price of RM1.20 per share. The listing exercise will offer up to 398.7 million shares for sale, of which 327.59 million shares will be for institutional investors and 71.1 million shares for retail investors.

According to its prospectus, the offer is expected to raise about RM478.4 million in proceeds. However, Sunway will not receive anything from the share sale.

Sunway will be distributing 175 million SCB shares to its entitled shareholders by way of dividend-in-specie on the basis of one distribution share for every 10 existing Sunway shares held.

Being the controlling shareholder, Sunway will maintain a minimum stake of 51% in SCB.

This article first appeared in The Edge Financial Daily, on June 30, 2015.