Sunway Construction

[winston]

not vested

1Q25: Full Throttle On DC Frontier

Suncon delivered impressive 1Q25 earnings within expectations, reflecting the construction segment’s improved progress billing, particularly from the higher-margin data centre projects.

The group also announced another RM393m data centre project from K2 yesterday.

With robust orderbook replenishment and rosy prospects for 202526, we remain optimistic that Suncon can still deliver palatable capital returns for investors.

Maintain BUY with a higher target price of RM5.46.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

Bumper quarter; wins K2 Phase 2 DC job

1Q25 was a bumper quarter beating Bloomberg consensus on the back of acceleration in DC recognition with improvement in construction margins.

RM393m K2 DC phase 2 job win brought orderbook to RM6.6bn; sizeable upsizing of its ECI for a US MNC is next, in our view.

Reiterate Add and TP of RM5.70 based on GGM.

Source: CGS

https://rfs.cgsi.com/api/download?file= ... 60CE80F5D8

[winston]

not vested

Solid beat all round

U/G to BUY with higher TP of MYR5.24 (+26%)

Earnings, dividends and job wins all beat our expectations.

Reflecting higher annual jobs wins of MYR5.5b (MYR4.5b previously) and DPR of 70% (50% previously), we raise our EPS estimates by 6-23% and lift DPS estimates by 48-68%.

Accounting for higher earnings growth and dividend yields, we peg a higher FY25E PER of 24x or +1 SD to 12M forward PER mean (from 21x or +0.5 SD to 12M forward PER mean).

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/459073.pdf

[winston]

not vested

Upping the ante

Maintain BUY with higher TP of MYR6.72 (+28%)

SCGB attended our Data Centre Corporate Day last week. We believe SCGB is confident of surpassing its initial job wins target of MYR4.5b-6.0b in 2025. SCGB is raising it to MYR8.0b.

We raise our annual job wins assumption to MYR7.0b from MYR5.5b.

Net impact is a raise to our earnings estimates by 20-30% over FY25E-FY27E.

Rolling forward our valuation base year to FY26E from FY25E and ascribing an unchanged 24x PER (+1SD to 12M forward PER mean), we lift our TP to MYR6.72 from MYR5.24.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/465177.pdf

[winston]

not vested

Sunway Construction (SCGB MK) Finding Anchors

Moving on from the sector’s selldown stemming from the US’ AI chip export restrictions and reciprocal tariffs, Suncon has outperformed ytd with an around 30% capital return.

The group’s rosy guidance for 2025-26, robust orderbook replenishment and strong DC tender pipelines are key catalysts.

Nevertheless, valuations appear rich with a balanced risk-reward ratio.

We maintain our HOLD rating and target price of RM5.55. Key upside risks include higher-than-expected orderbook replenishment.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

Expect knee jerk reaction from potential US AI rules

Laying out the possible scenarios

We expect a negative knee jerk reaction following news on the United States planning to restrict shipment of AI chips to Malaysia.

We leave our earnings estimates unchanged as we believe it premature to pass judgement.

However, we highlight 2 possible scenarios:-
i) worst case fair value of MYR2.16 if annual job wins fall to MYR1.6b; and
ii) share price falling to as low as MYR3.36 on PER derating to trough levels.

Our current TP of MYR6.72 and BUY rating is premised on annual job wins of MYR7.0b.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/468540.pdf

[winston]

vested

Sunway Construction Group Berhad - One Rotten Apple Soured Sentiment
Date: 2025-07-22
Firm: TA
Price Target: 5.59
Price Call: SELL

Valuation

Excluding the 3% ESG premium, we lower our target price to RM5.59 (from RM5.76 previously), based on an unchanged target PER of 22x CY26 earnings.

In light of the ongoing investigation, we anticipate heightened investor caution, which may prompt near-term profit-taking.

As such, we maintain our Sell recommendation on the stock and advise investors to capitalise on any strength in share price as an opportunity to pare down exposure.

https://klse.i3investor.com/web/priceta ... arch/75818

[winston]

vested

Sunway Construction - One Instance Does Not Establish a Pattern; Stay BUY

Date: 2025-07-22
Firm: RHB
Price Target: 6.55
Price Call: BUY

Still BUY, with new MYR6.55 TP from MYR6.80, 19% upside and 3% yield.

Management clarified that this isolated investigation does not concern the way SCGB secures contracts from its clients.

A key rerating catalyst aside from new DC wins would be if SCGB secures any packages from the Penang Light Rail Transit project as the last infrastructure job it won was the Rapid Transit System Link Package 1B and Package 5 back in Mar 2023.

Key risk: Lower-than expected job wins.

https://klse.i3investor.com/web/priceta ... arch/75820

[winston]

not vested

Sunway Construction (SCGB MK)

2Q25: Earnings Beat Expectations, But Fairly Priced In

Suncon’s 2Q25 performance beats consensus expectation, lifted by better construction progress billing and higher-margin data centre projects.

The group’s improving net cash of RM1.24b also yields higher interest income and lower financial costs.

Overall, Suncon’s robust orderbook pipeline continues to support record-high earnings in 202527, but capital returns for investors are modest after resilient share price (+26% ytd).

Maintain HOLD with a higher target price of RM6.27.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email