KUALA LUMPUR: Sunway Construction Group Bhd's (SunCon) latest contract win for a data centre in Selangor has grown its unbilled order book size to an all-time high of RM6.9 billion.
The win is posied to push the group's contract wins beyond Hong Leong Investment Bank (HLIB) Research's assumption of RM3.4 billion for financial year 2024 (FY24).
HLIB Research increased its FY25 forecast for the group by 8.6 per cent, with no change is made for FY24.
It maintained a "Buy" on the stock with a higher target price of RM3.20.
SunCon announced that it has entered into a project services request worth R M 7 4 7.8 million. The counter party is a multinational technology corporation based in the United States.
HLIB said this latest contract win coupled with multiple contracts secured in February brought the group's FY24 secured contracts to RM1.6 billion year-to-date, boosting SunCon's unbilled orderbook to an all-time high of RM6.9 billion – surpassing its previous high-water mark of RM6.8 billion achieved in FY17. "Note that this data centre contract is not related to Early Contractor Involvement (ECI) Packages A & B the company secured in February. "While both ECI packages were only worth a total RM6.8 millio , a successful conversion of the subsequent EPC contract could bring its contracts wins beyond our RM3.4 billion assumption for FY24. "The ECI phase is expected to complete in August 2024. For context, a consultancy contract for a RM1.7 billion data centre (EPC value) is worth RM8.8 million and not to mention, the ECI phase normally involves a smaller scope (vs consultancy)," it said in a note. The firm gathered that SunCon still has multiple tenders in the advance technology facilities space. "We reckon the company's end to end in-house construction capabilities and track record in specialty M&E and cooling segment will continue to serve them well in this space. "Separately, we gather that prospects on its RM6.3 billion. Vietnam contract continues to be positively biased and there remains potential contract awards from internal projects, warehouses/factories as well as precast. Infrastructure project rollouts will also add to its pipeline.