INVESTMENT HIGHLIGHTS

• Awarded RM99.5m job to build Bigbox Hotel in Sunway Iskandar

• The hotel is part of a mixed-development proposed under Sunway Iskandar masterplan

• MOU with CCL, a positive news

• The progress is expected to run for 18 months, with scheduled completion by 3Q20

• We make no changes to earnings estimates

• We maintain NEUTRAL with an unchanged TP of RM1.81

Awarded RM99.5m job. Sunway Construction Group Berhad (SunCon) announced yesterday that its fully owned-subsidiary, Sunway Construction SB (SCSB), has accepted a letter of award issued by Sunway Marketplace Sdn Bhd. The job award entails the proposed construction of 14-Level Hotel Block for the mixed development on Medini Zone F, Medini Iskandar Malaysia. The contract sum is estimated at RM99.5m.

Background on Sunway Iskandar. The Marketplace is one of the six precincts featured under the Sunway Iskandar masterplan. The proposed mix development sits on Medini Zone F, with expected GDV at RM30b. Located next to the Coastal Highway Southern Link (CHSL), the Marketplace will potentially introduce new products and concepts, including a retail village with 500,000 sq ft of gross floor area dubbed as the Sunway Big Box Village. Potentially, the development will integrate synergistic key components including education, hospitality, retail and residential. Refer Exhibit 1.

Impact to earnings. Assuming works to commence immediately, the progress is expected to run for 18 months, with scheduled completion by 3Q20. Following this latest job win, the total new projects secured this year has amounted to RM967.2m. As of December 2018, we estimate the latest outstanding orderbook to stand at approximately RM6.2b, denoting three years of visibility.

No change to forecasts. SunCon’s replenishment progress remains incheck, which currently covers 64% of our assumptions. Accordingly, no change was made to our FY19/FY20 earnings forecasts.

Source: MIDF Research - 2 Apr 2019