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 13-15x for mid-cap listed construction companies.

• This follows the award by Sunway REIT Management Sdn Bhd to appoint SunCon as the project delivery partner (PDP) for the design and construction work of the existing Sunway Carnival Shopping Mall expansion worth RM274mil. The proposed expansion work includes building a 9-storey commercial consisting of 3-storey retail, sub-basement retail, 6-storey podium carpark and basement carpark, and is expected to be completed in FY20.

• We are positive on the latest development. This is the first key job SunCon has secured in FY18, boosting its outstanding construction order book to RM6.4bil (Exhibit 1). We are keeping our forecasts that assume job wins of RM2.0bil annually in FY18-20F.

• 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 - 28 Feb 2018