Investment Highlights

• We raise our FY17-19F forecasts by 0.4%, 2% and 3% respectively, increase our FV to RM2.65 (from RM2.60) and maintain our BUY call.

• Our FV is based on 15x revised FY18F EPS, in line with our benchmark forward PE of 14-16x for large-cap listed construction companies.

• This follows the award by Prasarana to Sunway Construction (SunCon) of RM2.18bil viaduct packages of the LRT3 (Packages GS07 and GS08 – from Kawasan 17 to Sri Andalas, including a cable-stayed bridge over the Klang River), to be completed within the next 36 months.

• The latest contract has boosted SunCon's YTD job wins to RM3.75bil (which has surpassed our full-year FY17F assumption of RM3.5bil) and outstanding construction order book to RM6.5bil (Exhibit 1). We are positive on the latest development.

• The earnings upgrade is to reflect the upward revision in our job replenishment assumption for FY17F to RM3.8bil. Meanwhile, we are keeping our assumption for job wins in FY18-19F at a more normalised level of RM2bil annually.

• We continue to like SunCon for: 1) its good earnings visibility underpinned by a sizeable outstanding order book which will keep it busy for the next 2-3 years; 2) its strong prospects for new job wins underpinned by various mega infrastructure projects, particularly the railrelated ones, in the market; and 3) its proven track record with various blue-chip clients in the market.

Source: AmInvest Research - 6 Oct 2017