Investment Highlights

• We maintain our BUY call, forecasts and FV of RM2.70 based on 15x FY18F EPS, in line with our benchmark forward PE of 14-16x for large-cap listed construction companies.

• This follows the award by Nippon Express to the 50:50 Sunway-Taisei JV for the design and construction work of Nippon Express Malaysia's warehouse in Section 21, Shah Alam, worth RM140mil. SunCon's share is RM70mil and the job is expected to be completed within the next 22 months.

• We are positive on the latest development. This contract has boosted SunCon’s YTD job wins to RM3.96bil (which is fairly consistent with our FY17 full-year assumption of RM3.9bil) and outstanding construction order book to RM6.7bil (Exhibit 1).

• We are keeping our assumption for job wins of RM3.9bil in FY17F, normalising to RM2bil annually in FY18-19F.

• We continue to like SunCon for: 1) its good earnings visibility backed 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 rail-related ones, in the market; and 3) its proven track record with various blue-chip clients in the market.

Source: AmInvest Research - 15 Nov 2017