· Sunway subsidiary Sunway Construction Group Bhd announced last Friday the securing of a RM1.61bil contract with Putrajaya Bina S/B for the construction of government office buildings in Putrajaya. The office buildings consist of 10 office towers, a shared services block, podium parking and external works at Parcel F, Precinct 1 in the government administrative capital.

· Sunway said the project aimed to achieve Gold Certification under the Green Building Index requirements. It will be implemented via Building Information Modelling through SCG’s Virtual Design and Construction (VDC) system from inception to completion.

· The project will commence on 18 September 2015 for a total of 34 months. With the latest, SCG’s total outstanding order book currently stands at RM4.3bil. The contract brings the total secured so far this year to RM2.2bil – far exceeding our new order assumption of RM1.8bil for FY15F.

· Recall that Sunway posted 1H15 net profit of RM267mil (+13% YoY), which came in within expectations, on the back of an already strong performance at its construction division.

· The 1H15’s construction EBIT already made up 98% of our full-year number. However, this was mainly due to a reversal of over-elimination of intra-group profit in previous quarters. The latest construction contract will further boost its bottom line.

· We maintain our numbers for now. The group is facing a slowdown in property development division, with sales registering at only RM478mil (effective: RM353mil). Mitigating the slowdown was an unbilled sales of RM2.3bil (effective: RM1.7bil) as at end-June 2015. Sunway is targeting to launch RM2.1bil worth of projects in 2H15.

· Apart from the already declared 26 sen/share special dividend, which will be paid on 16 October, we maintain BUY with a fair value of RM3.74/share, for continued exposure to the southern economic development corridor, specifically in Sunway Iskandar. 

Source: AmeSecurities Research - 15 Sep 2015