Friday 29 Mar 2024
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KUALA LUMPUR: Sunway Bhd is confident of winning an extra RM1.5 billion to RM2 billion in construction jobs by year-end to boost its current outstanding order book of RM2.8 billion.

Chief financial officer Chong Chang Choong told reporters after the group’s annual general meeting yesterday that an estimated RM4 billion order book would be able to sustain a run rate of two years.

“Our current outstanding order book is RM2.8 billion. Of course we target to grow our order book. We are still working on a few prospects but we are confident by the end of the year, we should be able to increase our order book by between RM1.5 billion and RM2 billion.

“(This is) because our annual run rate for the construction segment averages between RM1.8 billion and RM2 billion a year. Therefore, our order book of RM4 billion will sustain a run rate of two years,” Chong said.

He noted that the group would try its best to sustain high double-digit growth amid challenging economic conditions despite recording a compound average growth rate (CAGR) of more than 20% in 2013 and 2014.

“Our perspective has been to try to register growth of 5% to 10% every year. In the last five years we have outperformed the target we set. If you track our profit over the last two years, (you will see) we have registered a CAGR of more than 20% for 2013 and 2014,” Chong said.

Sunway’s (valuation: 2.4; fundamental: 1.5) gross development value (GDV) for existing and ongoing property development amounted to RM5.7 billion as at Dec 31, 2014 while the average take-up rate to date was more than 70%, he said.

Chong targets property sales to be about RM1.7 billion this year after recording RM240 million sales in the first quarter ended March of financial year 2015 (1QFY15). Currently, Chong said, unbilled sales for the property sector amount to RM2.5 billion, which begins 2015 onwards.

He added that the company is taking advantage of the soft property market to expand its land bank, citing its recent purchase of 6.9ha of prime land in Kelana Jaya with an estimated GDV of RM1.8 billion.

“I think given the current market consolidation in the property sector, it is a good opportunity for us to look at landbanking opportunities. Plus, when the market is a bit soft, then the landowner’s expectation of the land price would not be as high. So that is an opportunity for us,” he said.

Asked which segment would drive Sunway’s revenue this year, Chong said that depends on sales, construction and billings.

 

This article first appeared in The Edge Financial Daily, on June 26, 2015.

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