PETALING JAYA: Sunway Construction Group Bhd (SunCon) has raised its internal 2024 orderbook replenishment target to RM2.5bil from RM2bil.

       In terms of new contract wins, SunCon is expected to secure at least one data-centre project this year, while the Song Hau 2 power plant in Vietnam is likely to be finalised by the first half of 2024.

       The key re-rating catalysts for the company’s share price include securing the Song Hau 2 project and higher-than-expected orderbook replenishments, said Phillip Capital Research.

       It foresees opportunities for SunCon to venture into overseas data-centre projects through its existing clients, including Yellowwood Properties and K2 Strategic, by leveraging on its robust domestic track record.

       SunCon is tendering for a few sizeable data-centre projects, the contract values of which are likely to be on a par with its on-going data centre projects.

       The progress of the Song Hau 2 thermal power plant in Vietnam remains contingent upon the client’s financial closing.

       The project has recently been granted an extension by the Vietnam authorities, and should see clarity closer to June 2024.

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       If SunCon is successful, the contract could add RM6.1bil to its orderbook, which currently stands at RM5.8bil (2.7 times cover ratio on 2022 revenue).

       Based on its back-of-the-envelope calculations, the research house sees 23% to 48% earnings upside potential, which could see the target price being raised to RM2.53 a share.

       It has a “hold” rating on the stock with an unchanged target price at RM2.06 a share.

       This is based on a 16 times price earnings ratio multiple on 2024 earnings per share.