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Another local contract
• Construction contract worth RM129m
Sunway has announced that its wholly owned subsidiary, Sunway Construction Sdn Bhd had on 28 June 2010 accepted a letter of award for a contract worth RM129m from PML Dairies Sdn Bhd for the construction of a dairy product factory located on Jalan Sungai Pinang, Pulau Indah, Port Klang Bandar Diraja. The proposed project is expected to be constructed over a 12 month period, ending July 2011.
• Steady stream of contracts
Sunway Holdings has seen a consistent stream of smallish construction jobs since early 2010. With the latest addition to its order book, Sunway has secured RM602m worth of contracts year to date, bringing total outstanding construction order book to RM3.1bn (see Figure 1). Thus far, its construction order book has been boosted by mostly local projects, although overseas jobs still make up 64% of the outstanding order book. Order book replenishment is expected to remain strong going forward, with some contribution from overseas construction contracts, particularly from Abu Dhabi and India.
As the contract falls within our annual order book replenishment assumption of RM1.5bn, we make no changes to our estimates.
• Reiterate BUY call
Sunway is our top BUY for the construction sector. This is premised on (1) strong earnings growth of 46.4% in FY10, (2) undemanding forward P/E valuation of 7.8x, (3) more landbank acquisition in the pipeline, and (4) strength in securing overseas construction contracts, in particular Abu Dhabi and India. Our target price is unchanged at RM2.00 which is derived from 10x P/E on FY10 EPS. This is further supported by sum-of-parts valuation of RM2.74 (see Figure 2).
• Construction contract worth RM129m
Sunway has announced that its wholly owned subsidiary, Sunway Construction Sdn Bhd had on 28 June 2010 accepted a letter of award for a contract worth RM129m from PML Dairies Sdn Bhd for the construction of a dairy product factory located on Jalan Sungai Pinang, Pulau Indah, Port Klang Bandar Diraja. The proposed project is expected to be constructed over a 12 month period, ending July 2011.
• Steady stream of contracts
Sunway Holdings has seen a consistent stream of smallish construction jobs since early 2010. With the latest addition to its order book, Sunway has secured RM602m worth of contracts year to date, bringing total outstanding construction order book to RM3.1bn (see Figure 1). Thus far, its construction order book has been boosted by mostly local projects, although overseas jobs still make up 64% of the outstanding order book. Order book replenishment is expected to remain strong going forward, with some contribution from overseas construction contracts, particularly from Abu Dhabi and India.
As the contract falls within our annual order book replenishment assumption of RM1.5bn, we make no changes to our estimates.
• Reiterate BUY call
Sunway is our top BUY for the construction sector. This is premised on (1) strong earnings growth of 46.4% in FY10, (2) undemanding forward P/E valuation of 7.8x, (3) more landbank acquisition in the pipeline, and (4) strength in securing overseas construction contracts, in particular Abu Dhabi and India. Our target price is unchanged at RM2.00 which is derived from 10x P/E on FY10 EPS. This is further supported by sum-of-parts valuation of RM2.74 (see Figure 2).
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