KUALA LUMPUR: Hong Leong Investment Bank Research (HLIB) has maintained a “buy” call on Sunway Construction Group Bhd (SunCon) with a higher target price following its latest contract wins.

       SunCon has accepted two letters of intent for works in relation to solar photovoltaic energy generating facilities under the large scale solar 4 (LSS4) programme worth a combined value of RM385mil.

       It also has entered into a supplemental agreement with Sunway South Quay Sdn Bhd to revise the contract sum of the construction of commercial mixed development in Bandar Sunway to RM755.7mil from the original contract value of RM463.2mil.

       “The win brings total orders to RM1.47bil beating our existing assumption of RM1.2bil which was enabled by our recent downward revision.

       “Including the new orders, total orderbook increases to RM5.3bil representing a healthy 3.4x cover on FY20 revenue,” HLIB said.

       The research house believes the new contracts have also adequately accounted for high materials costs throughout 2021 with margin upside should prices weaken.

       HLIB has increased SunCon’s FY22-23 earnings forecasts 1.6% and 1.3% after factoring the latest job wins.

       It has also cut its FY22 replenishment assumption by circa RM400mil as it had earlier expected the LSS4 contracts to come in FY22.

       “We are pencilling in RM1.8bil of total orders for FY22.

       “Maintain buy with a slightly higher target price of RM1.77. Existing presence in infrastructure friendly India and strong internal pipeline is comforting for job flow clarity” it said.