This article first appeared in The Edge Financial Daily, on October 19, 2015.

Sunway Construction Group Bhd
Oct 16 (RM1.26)
Maintain buy call with an unchanged target price (TP) of RM1.52: Sunway Construction Group Bhd (SunCon) had secured a project from Sunway Bhd for the construction of 222 units of linked houses, cluster homes and semi-detached houses in Pulai, Johor, worth about RM174.5 million. Including this contract, SunCon has successfully secured a total of RM2.3 billion worth of projects this year, hence providing earnings visibility for the next three years.

Although the amount has surpassed our financial year 2015 (FY15) jobs win assumption, we are maintaining our FY15 projection as we anticipate there will be no significant contribution from this project to FY15 earnings.

Year to date, SunCon has secured a total of RM2.3 billion worth of projects, maintaining its solid order book to approximately RM4.3 billion. This should keep the group busy until 2018. Assuming a profit before tax (PBT) margin of around 10%, this project could fetch a PBT of around RM17.5 million.

We remain positive on the group’s outlook as it continues to replenish its order book given its solid track record in the industry. It will also benefit from robust activities under the construction package of the Light Rail Transit 3, Mass Rapid Transit 2 and Bus Rapid Transit projects as well as continuously getting support from the Sunway group. — BIMB Securities Research, Oct 16