Sunway Bhd; Hold; RM2.96
Price Target RM3.40; SWB MK

Sunway Construction Sdn Bhd (SunCon), a wholly-owned subsidiary of Sunway Bhd, has accepted the letter of award worth RM282.9m from Pulau Indah Ventures Sdn Bhd [a joint venture company between Khazanah Nasional Berhad and Temasek Holdings (Private) Limited] for the mixed development “Urban Wellness” project in Medini Iskandar.

The project comprises 2 phases. Phase 1 includes a 5-storey corporate training centre with ground floor commercial space, a 4-storey health centre building, a car park podium and basement car parks. Phase 2 includes a 147 unit block service apartments, a 310 unit block of service apartments with 2 units of ground floor commercial space, a 1-storey commercial building, a car park podium and basement car parks. SunCon is also required to build a 4-level car park on government land. Construction is expected to commence on 1 September 2013 and complete by 31 October 2015 with a construction period of 26 months. .

This contract brings Sunway’s YTD construction wins to RM1.8bn and outstanding orderbook to RM4.2bn. This also represents its fourth infrastructure project in Johor for its existing orderbook. Assuming a conservative pretax margin of 5%, this contract could contribute RM11m in earnings over the contract duration. We maintain our HOLD rating on Sunway with an unchanged TP of RM3.40 which is based on a 10% discount to SOP.

Source: HwangDBS Research - 26 Aug 2013