• Sunway Construction (SunCon) has secured a related party job of RM278mil from Sunway’s wholly-owned Sunway Flora for the construction of 2 blocks of residential condominiums which consists of a podium, carpark, common facilities and swimming pool in Taman Mutiara, Bukit Jalil, Petaling, Kuala Lumpur.

• The construction of the residential condominiums will be carried out over 36 months from 1 Nov 2022 until 31 Oct 2025. We project EBIT of RM18mil from this project with the bulk to be recognised in FY23F.

• Following this win, total replenishment for FY22 to date amounts to RM881mil. As this is still within our order book replenishment assumption of RM1.5bil for the year, our forecasts remain unchanged.

• Meanwhile, they have also received a letter of award from Sharp Ventures Solar for a RM185mil contract to design, engineer, procure, construct, test and commission a 50MW solar photovoltaic energy generating facility in Kapar, Klang, Selangor. As the letter of intent for this job was issued back in Dec 2021, the project has already been accounted for as part of FY21 orders. Hence, our forecast remains unchanged.

• The duration of this job will be 18 months, which is expected to commence from Dec 2022 until Jun 2024. We estimate this project to contribute EBIT of RM12mil with the bulk to be recognised in FY23F.

• SunCon currently trades at a fair 13.2x FY23F PE, which is near our benchmark of 14x for large-cap construction stocks. Therefore, we maintain our HOLD rating.

Source: AmInvest Research - 2 Nov 2022