KUALA LUMPUR: Sunway Construction Group Bhd (SunCon) presents a safer exposure to future infrastructure project rollouts, backed by strong support from parent-co, said Hong Leong Investment Bank Bhd (HLIB Research).
The bank-backed research house said SunCon targets a base case replenishment target of RM2.0 billion in the financial year 2023 (FY23).
"This could rise to RM8.0 billion in a bull case scenario, augmented by the Vietnam power plant job.
"There is further upside should the company prove successful in its Tier 1 Mass Rapid Transit Line 3 (MRT3) bids," it said.
Meanwhile, HLIB Research said FY23 would be an important year execution-wise as this could unlock further data centre jobs with opportunities on an uptrend.
If it meets SunCon's expectations, it will present an upside risk to the firm's revised FY23 earnings forecasts.
"The project is a low-rise building covering a wide area of land; more foundation works and precast usage. SunCon is expecting to deploy up to 30 piling rigs for the project.
"Given that it's SunCon's first data centre project, execution is its utmost priority in FY23.
"We believe smooth execution would place SunCon in a strong position for more data centre wins where construction opportunities are on an uptrend," it said.
HLIB Research has increased its FY23 earnings forecasts by 10.0 per cent but cut FY24 earnings by 7.3 per cent post adjusting the burn rate for the data centre project.
"Maintain 'Buy' with a lower target price of RM1.94 after removing the healthy balance sheet assumption.