SunCon poised to exceed job win target

PETALING JAYA: Sunway Construction Group Bhd (SunCon) could surpass its own target of new job wins this year, with Maybank Investment Bank Research (Maybank IB Research) expecting the group to clinch RM8bil of new contracts this year (FY25).

At RM8bil, this will be about 33% to 78% higher than SunCon’s initial target of RM4.5bil to RM6bil.

To date, SunCon has already secured RM3.5bil, with plans to secure a RM1bil to RM1.2bil data centre job in the third quarter of this year (3Q25) as well as another one similarly valued soon after.

The targeted data centre jobs include those from Pearl Computing and other technology clients.

“Other than Pearl Computing, we understand that SunCon is in advanced discussions with three other companies, including one Nasdaq-listed company, to build data centres, with a job values expected at RM1bil to RM1.2bil,” said Maybank IB Research.

Internal projects from its parent company, Sunway Bhd, are also expected to support earnings growth further.

The research house noted that Sunway plans to launch Sunway Medical Centre Putrajaya and Sunway Medical Iskandar Puteri this year with 300 beds each.

It is estimated that each could add about RM500mil in contract value, assuming a capital expenditure of RM1.5mil to RM1.6mil. In the longer term, Maybank IB Research said SunCon expects to secure more internal jobs from Sunway rapid transit system-orientated developments and the Seremban Sentral project.

Looking ahead, SunCon is expected to deliver strong results in the near future, underpinned by a robust pipeline of data centre projects and internal jobs, as well as the recovery of its precast segment.

Maybank IB raised its earnings estimates on SunCon by 20% to 30% over FY25 and FY27.

It had also maintained a “buy” call on the group with a higher target price of RM6.72.

Echoing Maybank IB Research’s view, Affin Hwang Research also projects SunCon’s performance to be supported by its strong pipeline of data centre projects.

It was noted that data centre projects make up more than 80% of the group’s tender book.

“Fundamentally, SunCon’s earnings momentum will continue to remain strong, and we are forecasting 27% compound annual growth rate over 2025 to 2027, essentially doubling its historical earnings base before the influx of data centre contracts,” it stated.

Affin Hwang Research also foresees recovery ahead for SunCon’s precast segment, which had recorded a 33% decline in revenue in FY24.

The segment is expected to improve from this year onwards, driven by a plan from Singapore’s Housing and Development Board to launch 500,000 new flats.

However, it is worth noting that its contribution to the group’s revenue is expected to remain limited at 5% to 6%, given the outsized contribution from the construction segment.

Despite the overall positive earnings outlook, Affin Hwang Research downgraded its call on SunCon to a “hold”, citing valuation concerns.

“It has been a good run, and we believe the share price could take a breather.

“Therefore, we downgrade our call to ‘hold’ from ‘buy’, solely on valuation grounds with an unchanged target price of RM5.90,” Affin Hwang Research stated, adding that it is taking a more conservative stance that most positives are already priced in.