We  maintain  our  BUY  call  and  MYR3.76  fair  value  for  Sunway.  The company  announced  that  it has  secured  a  construction contract worth MYR283m in Medini, its fifth in the Iskandar region. With this, Sunway’s outstanding  orderbook  now  stands  at  MYR4.2bn.  Its  strong  orderbook backlog,  coupled  with  unbilled  sales  of  MYR2.3bn,  ensures  strong earnings visibility for Sunway over the medium term. 
 
- Secures  Urban  Wellness  project  in  Medini.  Sunway  announced  on Aug 23 that it has won a contract for the construction and completion of the Urban Wellness mixed development project in Medini North. Valued at  MYR183m,  the  contract  is  awarded  by  Pulau  Indah  Ventures  SB  (a joint  venture  between  Khazanah  Nasional  and  Temasek  Holdings (Private) Ltd). This is Sunway’s fifth construction contract in the Iskandar region.  Works  will  comprise  the  construction  of  a  corporate  training centre and a health centre building in Phase 1, while Phase 2 will include the  construction  of  two  service  apartment  blocks  and  one  commercial building.  The  project,  which  is  due  to  kick  off  in  1  Sept,  will  take  26 months to complete.

- Outstanding  orderbook  now  at  MYR4.2bn.  Sunway  continues  to successfully replenish its orderbook. Its total contract replenishment YTD is in line with our yearly orderbook target of MYR1.5-1.6bn. We note that its orderbook sources are diversified, with only about 20% or MYR847m coming from internal projects.  Given that most of its contracts are long-term  (>1  year),  we  believe  that  growth  prospects  for  the  company’s construction division are fairly strong.

- Maintain  BUY.  There  are  no  changes  to  our  FY13-14  earnings forecasts,  and  we  maintain  our  BUY  call  and  fair  value  of  MYR3.76. Sunway  remains  one  of  our  top  picks  for  the  sector,  as  its  earnings visibility  remains  strong  in  view  of  its  unbilled  sales  and  orderbook backlog. 

Source: RHB