ECM Libra Investment Research said Sunway Holdings Bhd (SunHldgs) is the top buy for the construction sector, amid its strong earnings growth of 86.5 per cent in financial year 2010.

It is also premised on the undemanding forward price to earnings valuation of 8.8 times, more landbank acquisitions in the pipeline, and strength in securing overseas construction contracts, it said in its research note today.

Sunway yesterday announced that it had entered into two memoranda of understanding (MoU) with the Jiangsu Changshu Economic Development Zone Authority to acquire two pieces of land measuring 14 acres and 25 acres respectively.

The acquisition is for the purpose of building factories for the manufacture of undercarriage parts and hoses.

ECM Libra said the details of the agreement and the proposed project are scant at this point in time.

"However, conditions appear conducive for an investment in manufacturing facilities in the vicinity.

The land is located within the Changshu Economic Development Zone (CEDZ) which was officially established in 1992, covering 71 sq km.

"We feel the strongest advantage of the CEDZ is its close proximity to a deep-water international port, the Changshu port, as the group caters to a large export market.

"Although it will undoubtedly contribute to the group's earnings growth, we do not see this to be in the near term, until land acquisition is sorted out and construction takes place," ECM Libra explained.

CEDZ has grown to be one of the best 10 Economic Development Zones in the Jiangsu province, with US$6 billion invested by 230 foreign firms.

It is easily accessible via highways as well as railways, with tax incentives, warehousing and transportation facilities, among others. -- Bernama