▲ TA SECURITIES
A MEMBER OF THE TA GROUP
A MEMBER OF THE TA GROUP
RESULTS UPDATE
Friday, August 22, 2025
FBMKLCI: 1,592.87
Sector: Construction
Friday, August 22, 2025
FBMKLCI: 1,592.87
Sector: Construction
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Sunway Construction Group Berhad: Restoring ESG Premium
Raymond Ng Ing Yeow
Tel: +603-2167 9601
raymondng@ta.com.my
Results Review
- Stripping off a one-off expense of RM16.7mn, SUNCON’s IHFY25 core earnings of RM176.3mn beat both our and consensus expectations at 58.7% and 58.2% of respective full-year forecasts. The positive variance was largely attributed to stronger-than-expected progress billings from ongoing data centre (DC) projects.
- YoY, group revenue more than doubled to RM2.9bn, underpinned by accelerated revenue conversion from a larger orderbook alongside increasing DC project contributions. Consequently, adjusted core earnings leapt from RM64.5mn to RM176.3mn.
- QoQ, revenue improved 5.5% on steady project execution. Coupled with a lower effective tax rate, this resulted in a 14% QoQ expansion in core net profit.
- A second interim dividend of 7.3sen/share was declared, bringing IHFY25 total dividend payout to 12.3sen/share (IHFY24: 3.5sen/share).
Impact
- Factoring in the stronger-than-expected billings, we have adjusted our progress billing assumptions to reflect quicker revenue recognition in FY25. This lifts our earnings projections by 7.7%/9.6%/4.8% for FY25-27F.
- Meanwhile, we have upgraded our ESG rating from 3-star to 4-star, reflecting improved corporate governance sentiment following the MACC’s clarification that SUNCON and its subsidiaries are not under investigation.
Outlook
- YTD, SUNCON has secured RM3.8bn in new contracts, boosting its outstanding unbilled orderbook to RM6.7bn equivalent to 2.0x FY24 construction revenue, providing healthy earnings visibility.
- Looking ahead, tender activity is expected to remain buoyant, anchored by domestic infrastructure rollouts such as the Johor ART, Penang LRT and Penang International Airport expansion. SUNCON, given its track record and balance sheet strength, is well positioned to secure a share of these large-scale projects. At the same time, the group’s expertise in industrial and specialised facilities, particularly in the DC and advanced technology project (ATP) segments, positions it favourably within high-growth private sector opportunities.
- The recent clarification from MACC – confirming that SUNCON and its subsidiaries are not subject to investigation removes a key overhang.
Share Information
| Bloomberg Code | SCGB MK |
|---|---|
| Bursa | SUNCON |
| Stock Code | 5263 |
| Listing | Main Market |
| Share Cap (mn) | 1,312.0 |
| Market Cap (RMmn) | 7675.4 |
| 52-wk Hi/Lo (RM) | 6.27/3.26 |
| 12-mth Avg Daily Vol (‘000 shrs) | 4914.3 |
| Estimated Free Float (%) | 27.4 |
| Beta | 1.2 |
Major Shareholders (%)
Sunholdings – 53.6
Sungei Way Corp Sdn Bhd – 9.9
Employee Provident Fund – 4.3
Amanah Saham Nasional Bhd – 3.3
Forecast Revision
| FY25 | FY26 | |
|---|---|---|
| Forecast Revision (%) | 7.7 | 9.6 |
| Net profit (RMmn) | 323.3 | 357.1 |
| Consensus | 303.0 | 332.8 |
| TA’s / Consensus (%) | 106.7 | 107.3 |
| Previous Rating | Sell (Upgraded) | |
| Consensus Target Price | 6.16 | |
Financial Indicators
| FY25 | FY26 | |
|---|---|---|
| Net Debt / Equity (%) | (72.6) | (90.8) |
| CFPS (sen) | 31.8 | 19.7 |
| Price / CFPS (x) | 18.4 | 29.7 |
| ROA (%) | 7.4 | 6.7 |
| NTA/Share (sen) | 74.7 | 81.5 |
| Price/NTA (x) | 7.8 | 7.2 |
Scorecard
| % of FY | ||
|---|---|---|
| vs. TA | 58.7 | Above |
| vs. Consensus | 58.2 | Above |
Share Performance (%)
| Price Change | SUNCON | FBM KLCI |
|---|---|---|
| 1 mth | 6.6 | 4.5 |
| 3 mth | 13.6 | 3.1 |
| 6 mth | 31.5 | 0.1 |
| 12 mth | 42.0 | (2.6) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
Page 2 of 4
TA SECURITIES
A MEMBER OF THE TA GROUP
This development should help restore investor and client confidence, particularly among stakeholders with strong focus on governance and compliance. We expect this reputational recovery to support stronger conversion of tender into secured projects.
Valuation
- Following the earnings revision, we raise our target price to RM6.31 (previously RM5.59), premised on 22x CY26 earnings with 3% ESG premium after restoring our ESG rating to 4-star. Upgrade from Sell to Hold.
- We continue to like SUNCON due to:- (i) its strong position as a contender for mega infrastructure projects, namely Johor EART, Penang LRT Segment 2, and Penang International Airport Expansion, and (ii) its leading position in securing new contracts within the thriving ATP industry.
Table 1: Earnings Summary (RM mn)
| FYE Dec (RMmn) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 2,671.2 | 3,521.7 | 5,526.5 | 5,862.8 | 6,064.0 |
| Gross profit | 434.2 | 581.1 | 856.6 | 938.0 | 970.2 |
| EBITDA | 245.5 | 279.4 | 389.6 | 402.5 | 396.3 |
| EBITDA margin (%) | 9.2 | 7.9 | 7.0 | 6.9 | 6.5 |
| EBIT | 224.5 | 262.2 | 372.2 | 384.1 | 377.0 |
| PBT | 188.6 | 273.0 | 439.0 | 484.8 | 491.7 |
| PAT | 145.1 | 186.9 | 323.3 | 357.1 | 362.1 |
| Core net profit | 176.8 | 166.6 | 323.3 | 357.1 | 362.1 |
| Core EPS (sen) | 13.8 | 13.0 | 25.2 | 27.8 | 28.2 |
| PER (x) | 39.8 | 45.0 | 23.2 | 21.0 | 20.7 |
| Gross dividend (sen) | 6.0 | 8.5 | 19.0 | 21.0 | 22.0 |
| Dividend yield (%) | 1.1 | 1.5 | 3.2 | 3.6 | 3.8 |
| ROE (%) | 18.6 | 22.0 | 35.2 | 35.7 | 33.4 |
Source: TA Research
Appendix I: FY25 YTD New Job Wins
| Projects | Client | Expected Completion Date | Contract Sum (RM mn) |
|---|---|---|---|
| RTS Transport Oriented Development @ Bukit Chagar, Johor | Sunway Integrated Properties Sdn Bhd | Dec-27 | 1,500.0 |
| General Works for 2 Data Centres | US based Multinational Technology Company | Feb-27 | 1,155.0 |
| K2 Data Centre Expansion | K2 Strategic Infrastruction Malaysia Sdn Bhd | Mar-25 | 392.7 |
| Others | Various | Various | 752.3 |
| Total | 3,800.0 | ||
Source: TA Research
Page 3 of 4
Table 2: IHFY25 Results Analysis (RM mn)
| FYE Dec | 2Q24 | 1Q25 | IQ25 QoQ (%) | YoY (%) | IHFY24 | IHFY25 | YoY (%) |
|---|---|---|---|---|---|---|---|
| Revenue | 651.2 | 1400.5 | 1476.9 | 5.5 | 126.
|
