KUALA LUMPUR: Sunway Construction Group Bhd (SunCon) is expected to record a higher orderbook for its financial year 2024 (FY24) given a vibrant advanced tech facilities sector, rail projects, and the potential formalisation of its Vietnam project.
Hong Leong Investment Bank Bhd (HLIB) said SunCon's latest unbilled orderbook stands at RM6.3 billion (2.4 times the FY23 revenue).
The bank said SunCon has snatched up RM1.7 billion worth of new contract wins in FY24 year to date (YTD).
"As highlighted earlier, we reckon the possibility of SunCon finishing FY24 on a stronger note than our earlier assumed RM3.4 billion wins looks increasingly higher," it said in a note.
While SunCon's tenderbook has diminished sequentially to RM9.4 billion at present, HLIB said this is almost entirely due to the expiry of two MRT3 tenders.
However, HLIB believes that the company still has four tenders in the advanced technology facilities (ATF) space and would be in an advantageous position to benefit from the expansion of existing key clients.
"Both its ECI (A and B) engagements are progressing well and have yielded work orders totalling RM53.4 million (rolling basis); we reckon the amount could be rather substantial as the project progresses," it said.
On another positive note, HLIB said SunCon has also been invited to potentially participate in ATF projects in India and Indonesia, opening up possibilities of regional penetration into a rapidly growing sector.
Elsewhere, HLIB said SunCon intends to participate in upcoming infrastructure projects like Penang LRT and Johor ART, while the runway for internal projects is healthy.
"Beyond the short term, SunCon's strong leverage on the "Johor theme" not only through its parent-co projects but also external projects should translate to more
opportunities moving forward as development momentum picks up in the state.
"Maintain buying with a higher target price of RM3.75. SunCon is a proxy for coming infrastructure project rollouts, a vibrant advanced technology facilities sector, and a growing parent-company business," it added.