Sunway Construction Group Bhd (Nov 21, RM2.40)

Maintain buy with a target price of RM2.67: Sunway Construction Group Bhd’s (SunCon) earnings for the first nine months of financial year 2017 (9MFY17) of RM106 million (+16% year-on-year [y-o-y]) were slightly below expectations, accounting for 65.1% and 70.7% of our and consensus full-year forecasts respectively.

SunCon’s 9MFY17 revenue of RM1.3 billion (+7% y-o-y) came in strong as a result of better-than-expected construction revenue of RM1.21 billion (+16.9% y-o-y), influenced by improvement in the higher progress billings rate.

Moving forward, we reckon that clinching the bus rapid transit (BRT) project from Klang to Kuala Lumpur would be a game changer for SunCon as this provides earnings upside to our assumptions.

Notably, its return on asset is 8.2% above the weighted average cost of capital of 6.7%, indicating the company is pushing hard to improve its asset efficiency and reduce its liabilities. — MIDF Research, Nov 21

This article first appeared in The Edge Financial Daily, on Nov 22, 2017.

For more stories, download EdgeProp.my pullout here for free.

SHARE
SPONSORED CONTENT
Convenient and integrated living in sync with nature

With a gross development value of more than RM30 billion over 1,800 acres of land, Sunway Iskandar is one of the largest township projects in the country and comprises six precincts – The Lakeview, The Parkview, The Riverside, The Marketplace, The Seafront and The Capital. Each precinct is designed to be self-sustainable while offering a wide range of amenities.

read more
RELATED POSTS
  1. SunCon divests district cooling JV to Sunway’s facilities arm in group realignment
  2. KL MPs mull revival of local polls to strengthen city democracy
  3. PAC calls for overhaul of KL land development system over unchecked approvals, ignored public objections and cheap land sales