In a note today, MIDF said the confidence in SunCon is backed by its strong order book and its consistency in replenishing jobs.
“We can expect the group to benefit from the development initiatives lined out in the 2024 budget and the mid-term review of the 12th Malaysia Plan and other off-budget projects such as the MRT3,” it said.
Besides this, the group’s precast business is also expected to provide a more significant contribution moving forward with its Integrated Construction and Prefabrication Hub (ICPH) in Singapore.
MIDF said 90% of its revenue in Singapore is from the country’s Housing and Development Board (HDB) flats.
SunCon currently has a total outstanding order book of RM5.79 billion, with earnings visibility up to FY2025.
Notably, in October 2023, the company exceeded its FY2023 replenishment target of RM2 billion after securing two significant projects, including an RM190 million data centre project in Johor and an RM297.7 million warehouse in Port Klang.
To date, SunCon has successfully secured a total of RM2.23 billion in new projects.
“The active tender book level currently stands at RM26.4 billion as the management continues to actively bid for data centres and semiconductor foundry projects,” MIDF said.
In addition, the group is also monitoring the National Energy Transition Roadmap (NETR) for potential opportunities.
Progress in construction projects despite hurdles
The research house said SunCon’s recent projects fuelled a 40.9% year-on-year (y-o-y) surge in construction segment revenue in Q3 FY2023 to RM590.5 million.
Moreover, the group’s precast business experienced a 65% y-o-y revenue increase, reaching RM83 million.
This surge was attributed to the positive impact of contributions from SunCon’s ICPH in Singapore, along with the successful initiation of various new projects.
However, there is a delay in the RM1.7 billion Sedenak Tech Park data centre project in Kulai, Johor, with RM1.5 billion in pending works since the project was awarded in Dec 2022.
Despite this, the management has assured that there is no alarming concern as the progress from the group’s other projects will be able to cover the shortfall in revenue.
SunCon recorded a core net profit of RM34.8 million for Q3 FY2023, which came in higher by 54.7% y-o-y on the back of improvements in both construction progress and its precast business.
As at 2.56pm, SunCon’s share price was up 3 sen or 1.59% at RM1.92, valuing the group at RM2.48 billion.