Sunway Construction Group Bhd (SunwayCon) has secured two work packages worth RM605 million from the Johor Bahru – Singapore (JB-SG) Rapid Transit System Link (RTS Link).

Package 1B involves the advance works for a station and viaducts while Package 5 involves the construction of terrestrial viaducts and its ancillary structures. The two work packages have a construction period of 26 months and are scheduled to be completed by the second quarter of 2025 (2Q25).

This the construction group’s second and third win from the RTS project and its first win being Package P2A worth RM112 million which was awarded back during the first quarter of financial year 2022 (1QFY22).

The win of the two packages brings SunwayCon’s year to date (YTD) job wins to RM663 million and its outstanding order book to RM11.9 billion.

Local analysts were overall positive on the two job wins with the research arm of Kenanga Investment Bank (Kenanga Research) noting that the current YTD job wins accounted for 30 per cent of their FY23 forecasted target of RM2.2 billion, which is slightly higher than SunCon’s own forecast of RM2 billion.

“The earnings before interest and tax (EBIT) margin of 5 to 8 per cent are in line with our assumption of 7.5 per cent,” Kenanga Research said.

In another report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) opined that with an estimated 6 per cent margin, that the two jobs will generate a profit of RM36.3 million, of which the contribution will be about RM12.6 million in FY23, RM16.7 million in FY24 and RM7 million in FY25.

Meanwhile, AmInvestment Bank Bhd (AmInvestment Bank) guided that they estimate SunCon’s EBIT accretion at to be at RM20 million per year or 9 per cent of the group’s FY24 EBIT.

Looking ahead, it is anticipated that SunCon will enjoy more job replenishment opportunities in data centre building jobs, an outflow of infrastructure jobs from Budget 2023 and the highly anticipated upcoming MRT3 project.

All in, all three analysts are optimistic on SunCon and maintain their `Buy’ or `Outperform’ call on the construction stock with unchanged target prices between RM1.84 to RM2.13.

AmInvestment Bank added on that their earnings estimates for the group may be raised further if SunCon wins the main package of the MRT3 project which is expected to be awarded during the second half of 2023 (2H23); or if its RM6 billion Vietnam Power Plant Project achieves financial close.