Sunway Holdings (RM1.49; Buy; Price Target: 1.95;)
Sunway had on 1 April 2010, accepted the letter of award for a contract worth RM88m from KLCC Holding Sdn Bhd for the construction of the proposed Phase 2 of Impiana KLCC Development. This is an extension to the existing hotel wings comprising an additional 3-storey car park podium and 22-storey tower block above the existing 4-storey car park podium on Jalan Pinang, Kuala Lumpur.
The contract is targeted to be fully completed on 2 November 2011 with a sectional completion of a link bridge within 43 weeks from the commencement date.
This is Sunway’s second contract win for 2010 bringing YTD contract wins to RM110m. This forms c.14% of our RM800m order win assumption for FY10 and will lift Sunway’s orderbook by 4% to RM2.5bn. Assuming a margin of 8%, total pretax profit over the duration of the contract amounts to RM7m or 1% and 3% of FY10 and
FY11 core pretax profit.
We continue to like Sunway as a small-mid cap pick to the sector. Earnings deliverance has been consistent while other key catalysts are a revival in India infrastructure contracts and the 10MP which would provide more clarity on contract flows. We reiterate our BUY rating and SOP-based price target of RM1.95.
source: HwangDBS Vickers
Another earlier technical perspective: Sunway chart and technical opinion
