Sunway Construction: Bracing for a lull period in local construction sector

UNDERWEIGHT

We cut our FY18-20F earnings forecasts by 25%, 30% and 25% respectively, reduce our FV by 24% to RM1.53 (from RM2.00) and downgrade our call to UNDERWEIGHT from HOLD. Our new FV is based on 12x revised FY19 EPS, in line with our benchmark forward PE of 10-12x for mid-cap listed construction companies.

We came away from a recent visit to the company feeling cautious on its outlook. We lower our assumption for job wins in FY18-20F to RM1.5bil annually (from RM2bil) to bring ourselves in line with the company’s latest construction order book replenishment target of only RM1.5bil in FY18F.

Others: Telecommunication: New broadband prices end of this month? Neutral

RETAIL RESEARCH

Stocks On Radar: QES Group, Gabungan AQRS, Foundpac Group, HSS Engineering

ECONOMIC HIGHLIGHT

Malaysia: Challenge between headline and youth unemployment

Source: AmInvest Research - 18 Sept 2018