HLIB’s rating was despite SunCon’s “slightly disappointing performance” in the first half of 2023 (H1 FY2023) mainly attributed to the slow progress of its key data centre project.

In a note today, HLIB said despite temporary delays, it remains upbeat that SunCon’s Corporate Green Power Programme’s project wins in the Large-Scale Solar 4 scheme positions the construction group for strategic benefits in the government’s National Energy Transition Roadmap.

The research house also said contract flows could pick up, given various award decisions were due while it expects the precast segment to continue benefitting from a healthy demand in Singapore.

“The precast business is on track for a strong performance in FY2023 and looks set for growth in FY2024-25.

Following the projections HLIB readjusted its earnings forecasts for the FY2023, 24, 25 by -1.1%, +1.2% and +0.6% respectively to align with expectations.

“We maintain buy, with a marginally higher TP of RM2.10, post minor tweaks in our earnings forecasts,” it added.

SunCon’s net profit for the second quarter ended June 30 (Q2 FY2023) rose marginally to RM33 million compared to RM32.3 million recorded in the same period last year while revenue rose to RM604.10 million from RM557 million.

However, HLIB deemed the results short of consensus expectations of the 38% to 41% of full year forecasts with the negative deviation ascribed to weaker than expected construction revenue and lower than anticipated margin.

On the other hand, SunCon attributed the higher turnover recorded in the same quarter to improved progress for newer projects.

At 4.45pm, its shares were unchanged at RM1.86, giving it a market capitalisation of RM2.4 billion.