Sunway Construction’s net profit rises 18% on higher revenue from construction, precast segments

The group’s quarterly revenue also surged 72.47% to RM 469.25m driven by improved performance across all segments

by AKMAR ANNUAR / graphic TMR

SUNWAY Construction Group Bhd’s (SunCon) net profit for the third quarter ended Sept 30, 2022 (3Q22), increased 17.72% to RM22.72 million from RM19.3 million previously, mainly due to higher revenue contributions from its construction and precast segments.

SunCon’s quarterly revenue surged 72.47% to RM 469.25 million from RM272.08 million in the same period a year ago driven by improved performance across all segments.

In an exchange filing to Bursa Malaysia yesterday, it said its revenue for the construction segment increased 63.8% to RM419 million in 3Q22 from RM255.8 million in 3Q21 due to normalisation of works at full capacity pursuant to transition of the economy into the endemic phase.

Also, its revenue for the precast segment more than tripled to RM50.3 million for the quarter under review, compared to RM16.3 million in the same quarter in the previous year.

Earnings per share was up to 1.76 sen from 1.5sen, the group’s bourse filing showed.

For the nine months ended Sept 30, 2022, SunCon’s net profit increased 87.07% to RM89.54 million from RM47.86 million on the back of increased revenue of 49.82% to RM1.65 billion from RM1.1 billion.

On its prospects, SunCon foresees its precast segment will contribute more to the group’s financials soon with the integrated construction and prefabrication hub plant targeted to be commissioned by December this year.

“Furthermore, SunCon’s outstanding orderbook stood at RM4 billion with RM882 million worth of new orders secured up to September,” it added.

In a separate statement, SunCon group MD Liew Kok Wing said the group remains cautiously optimistic of registering a positive growth in financial year 2022 (FY22), supported by its strong existing outstanding orderbook.

“We are heartened that the outlook for the construction sector in Malaysia is making reasonable headway in mega infrastructure investments as well as increased demand in e-commerce, cloud computing and microchips that has given rise to the need for more factories, warehouses and data centres amidst gradual easing of foreign labour shortage,” he concluded.

Meanwhile, MIDF Research reiterate their ‘Buy’ call on SunCon with an unchanged target price of RM1.87 derived by pegging its FY23F EPS of 10.7 sen to a price-earnings ratio of 17.5 times.

“SunCon remains as our top picks for the construction sector premised on many factors, from its

capability to handle its margins well to maintaining a robust balance sheet.

“The group is now in a net cash position of RM175.5 million, leaving it much headroom to take on further debts, if needed.

“At the same time, we expect SunCon to be among the front runners for the main Mass Rapid Transit Line 3 packages and we also like the group’s upcoming its Integrated Construction and Prefabrication Hub in Singapore, which is scheduled to be commissioned in December,” MIDF Research said in a research note today.

SunCon’s share price closed two sen down or 1.38% lower at RM1.43, bringing the group a market capitalisation of RM1.85 billion.