Business

Published: Wednesday March 20, 2013 MYT 9:01:00 AM

Still early days for Sunway after RM304m contract


KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining its Hold recommendation on Sunway Bhd at RM2.74 but with a lower target price of RM2.55.

It said on Wednesday the stock had a good run likely due to its growing Iskandar presence and was trading at just a 3% discount to its sum-of-parts.

“In our view, this is still early days as its maiden launch for Medini Iskandar will only happen in late 2013 or early 2014. Our TP of RM2.55 imputes a 10% discount,” it said.

Sunway secured a RM304mil contract from Cititower Sdn Bhd (a joint venture between KLCC (Holdings) Sdn Bhd and QD Asia Pasific Ltd) for package one.

This comprises of the construction and completion of North East Car Park (NEC) underneath KLCC Park and associated works for the proposed mixed development at Persiaran KLCC.

“This represents Sunway's fifth construction win for 2013 bringing year-to-date wins to an impressive RM1.25bil and its total outstanding orderbook to RM4.2bil.

“With this win, Sunway's needs just another RM250mil of new wins to meet our initial RM1.5bil new order win forecast for FY13F. Pretax margin guidance is in the region of 5%-7% where our forecast is at the high end of this,” it said.

HDBSVR said Sunway's total tenderbook had exceeded RM3bil, which comprised mainly building jobs as the capacity for civil works has been filled up.

“As the bulk of the tenderbook is at the early stages of tender or negotiation, we do not expect any near term new wins till the second half of 2013,” it said.

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