Wednesday 20 March 2013

Sunway Berhad - Getting Closer To Orderbook Target


Sunway has accepted the letter of award for the KLCC North East Car Park worth RM304m. With this contract, Sunway has successfully replenished its construction orderbook to RM1.25bn YTD. We believe Sunway can easily meet our orderbook assumption of RM1.5bn for the year. Current outstanding orderbook amounted to RM4.2bn. Coupled with RM2.78bn unbilled sales, earnings visibility will be strong.

KLCC underground carpark construction contract. The contract covers the construction and completion of 6 levels basement North East Car Park (NEC) underneath KLCC Park and the associated works. The job is expected to kick start from the date of site possession (to be determined) for 178 weeks (or 3.5 years). The contract is expected to contribute to the company’s earnings from FY13 onwards.

Orderbook raised to RM1.25bn. In less than three months, Sunway has successfully replenished its construction orderbook by RM1.25bn. Current outstanding orderbook is boosted to RM4.2bn. In addition to the RM2.78bn worth of unbilled property sales, earnings visibility for the company is strong.

Forecasts. Unchanged, as the contract secured YTD is within our orderbook assumption of RM1.5bn for FY13.

Investment case. We keep our Buy rating unchanged, and likewise our fair value of RM3.25, based on 30% discount to RNAV. The continued delivery of construction jobs, prudent landbanking efforts, responsive product launches as well as the strategic landbank exposure in Iskandar reaffirm our confidence in the stock.

Source: RHB

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