Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Construction sector
Maintain overweight: Sunway Holdings Bhd's RM569 million win is a pleasant surprise after press reports the Kelana Jaya Line Package B would go to TRC Synergy Bhd. Malaysian Resources Corp Bhd's (MRCB) RM1.33 billion win is also above the RM800 million to RM900 million estimates for the Ampang Line Package B. The LRT chapter, in terms of awards for the civil works portion, is coming to an end with all eyes now on MyRapid Transit which will enter the tendering stage for the elevated works portion in stages from September to December 2011. Our fair value for Sunway is RM3.85.
Sunway Holdings (en route to listing) and MRCB have won the main contracting final work packages for the Klang Valley LRT from Syarikat Prasarana Negara. We understand that both awards relate to just civil works and do not include rolling stock. Including the sub-contracting portion, we estimate RM79 million per km cost for the 8.1km Kelana Jaya route and RM129 million per km for the estimated 10.3km Ampang route (sources: Sunway and MRCB announcements, Prasarana's website). The huge cost disparity between the two lines, we understand, is due to design and traffic management which is more complex for the Ampang line.
Sunway's win has lifted its outstanding order book to RM2.38 billion (+31% from RM1.81 billion as at June 2011), positive for the stock which will be listed on Aug 23. This has also lifted job wins for the year-to-date to RM961 million, closing in on our RM1.2 billion forecast for 2011. The work includes site clearance; earthworks; viaduct, road and drainage works; traffic management and structural works. Work is expected to start upon the handing over of site possession, expected in September with a 29-month construction period. Assuming a 5% net margin, we estimate RM28 million net profit (2.2 sen earnings per share [EPS]) contribution into 2014.
Besides RM1.33 billion for the Ampang line, MRCB has also won the RM67 million sub-contract for the fabrication and delivery of segmental box girders for the Kelana Jaya line awarded to Sunway.
The RM1.33 billion comprises the construction of facilities, including the fabrication and delivery of segmental box girders for the Ampang line extension. The work period is 30 months from the site possession date.
Assuming a 5% net margin, we estimate RM70 million net profit (five sen EPS) contribution into 2014. This win has doubled MRCB's outstanding order book to RM2.64 billion from RM1.24 billion as at June 2011. ' Maybank IB Research, Aug 17
This article appeared in The Edge Financial Daily, August 18, 2011.
Company Name: SUNWAY HOLDINGS BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.85 |
Construction sector
Maintain overweight: Sunway Holdings Bhd's RM569 million win is a pleasant surprise after press reports the Kelana Jaya Line Package B would go to TRC Synergy Bhd. Malaysian Resources Corp Bhd's (MRCB) RM1.33 billion win is also above the RM800 million to RM900 million estimates for the Ampang Line Package B. The LRT chapter, in terms of awards for the civil works portion, is coming to an end with all eyes now on MyRapid Transit which will enter the tendering stage for the elevated works portion in stages from September to December 2011. Our fair value for Sunway is RM3.85.
Sunway Holdings (en route to listing) and MRCB have won the main contracting final work packages for the Klang Valley LRT from Syarikat Prasarana Negara. We understand that both awards relate to just civil works and do not include rolling stock. Including the sub-contracting portion, we estimate RM79 million per km cost for the 8.1km Kelana Jaya route and RM129 million per km for the estimated 10.3km Ampang route (sources: Sunway and MRCB announcements, Prasarana's website). The huge cost disparity between the two lines, we understand, is due to design and traffic management which is more complex for the Ampang line.
Sunway's win has lifted its outstanding order book to RM2.38 billion (+31% from RM1.81 billion as at June 2011), positive for the stock which will be listed on Aug 23. This has also lifted job wins for the year-to-date to RM961 million, closing in on our RM1.2 billion forecast for 2011. The work includes site clearance; earthworks; viaduct, road and drainage works; traffic management and structural works. Work is expected to start upon the handing over of site possession, expected in September with a 29-month construction period. Assuming a 5% net margin, we estimate RM28 million net profit (2.2 sen earnings per share [EPS]) contribution into 2014.
Besides RM1.33 billion for the Ampang line, MRCB has also won the RM67 million sub-contract for the fabrication and delivery of segmental box girders for the Kelana Jaya line awarded to Sunway.
The RM1.33 billion comprises the construction of facilities, including the fabrication and delivery of segmental box girders for the Ampang line extension. The work period is 30 months from the site possession date.
Assuming a 5% net margin, we estimate RM70 million net profit (five sen EPS) contribution into 2014. This win has doubled MRCB's outstanding order book to RM2.64 billion from RM1.24 billion as at June 2011. ' Maybank IB Research, Aug 17
This article appeared in The Edge Financial Daily, August 18, 2011.
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