SunCon clears the air on MACC probe at investor briefing, maintains strong outlook

New Straits Times

5 days ago

KUALA LUMPUR: Sunway Construction Group Bhd (SunCon) has dismissed concerns over its long-term prospects following the recent remand of one of its employees by the Malaysian Anti-Corruption Commission (MACC) over subcontractor-related dealings.
In an investor briefing led by group managing director Liew Kok Wing, SunCon affirmed that the incident poses no threat to its long-term prospects or operational integrity, stressing the incident is isolated and does not implicate the company, Maybank Investment Bank (Maybank IB) said in a note.
According to Maybank IB, the group assured investors and clients that the probe involves only a single contract manager and a few subcontractors, not the company as a whole. The employee has since been suspended and will be terminated after the remand period.
SunCon, which is involved in several high-value data centre projects in the Klang Valley and Johor, has been in active communication with clients to explain the situation. So far, responses have been supportive, and the group does not expect any disruption to its ongoing projects, Maybank IB said.
To further bolster investor confidence, SunCon highlighted its recent Anti-Bribery Management Systems (ABMS) certification, awarded just two months ago following an audit by SIRIM and external parties.
"It believes its standard operating procedures (SOPs) are sound and the aforementioned case involved just that one employee. SCGB revealed that it conducts subcontracting tenders electronically and only awards to local companies that offer the lowest bid," Maybank IB said.
The investment bank said that while acknowledging some reputational impact, SunCon believes the long-term outlook remains intact.
"At the very least, it does not expect its existing projects to be affected. SunCon stated that its clients have been receptive of its explanation. Given SunCon's explanation, we believe there should not be too many negative repercussions over time once the case is settled, though there may be near-term distractions," Maybank IB said.
Maybank IB reiterated its "BUY" call on SunCon, maintaining a target price of RM6.72 based on 24x fiscal year 2026 earnings, supported by annual job win expectations of RM7 billion.
Similarly, Hong Leong Investment Bank (HLIB) echoed a bullish stance, reaffirming its "Buy" rating with a target price of RM6.70. HLIB noted that SunCon's management has assured the RM180 million work scope under the employee's purview can be absorbed internally if subcontractor changes are required.
Technically, SunCon shares formed a Hammer candlestick pattern at RM5.49 on July 21, after sliding from an all-time high of RM6.27 on June 11 to a recent low of RM4.93 - a signal that a near-term rebound may be on the horizon.
Despite the volatility, SunCon has delivered strong year-to-date performance, trading 12.96 per cent above its January opening price of RM4.63, with a trading range between RM3.29 and RM6.16 - reflecting both investor optimism and broader market swings.
In a separate development, the Employees Provident Fund (EPF) - a key shareholder since 2018 - disposed of 20 million shares on July 14 via Citigroup Nominees, trimming its stake to 4.27 per cent and exiting its position as a substantial shareholder.
SunCon, listed on Bursa Malaysia in July 2015, continues to demonstrate resilience amid market headwinds - underpinned by strong fundamentals, a solid project pipeline, and growing confidence from both clients and analysts.