Latest news with #SunCon
New Straits Times
23-07-2025
- Business
- New Straits Times
SunCon clears the air on MACC probe at investor briefing, maintains strong outlook
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.
The Star
22-07-2025
- Business
- The Star
SunCon navigates probe with steady outlook
TA Research has revised the company's ESG rating to three stars from four. PETALING JAYA: There could be some near-term reputational damage to Sunway Construction Group Bhd (SunCon) in relation to the investigation of an employee connected to a Johor data centre (DC) project tender by the Malaysian Anti-Corruption Commission (MACC), but the focus will remain on whether the company can continue to win more DC projects. Analysts covering SunCon said while the case would run its course and be eventually settled, the company, which has a sterling reputation for corporate disclosures, must, for now, bear the brunt of reputational damage. Several analysts have also revised the company's environmental, social and governance (ESG) premium tagged to its share price, which suffered a sell-down on Monday before recovering some ground. Maybank Investment Bank Research has maintained a 'buy' call on the stock with a target price (TP) of RM6.72 and an earnings estimate premised on annual job wins of RM7bil. It believes there should not be too many negative repercussions over time once the case has been settled, though there may be near-term distractions. Following news of the MACC investigation, SunCon moved swiftly to manage the situation, including a briefing with analysts. However, several analysts noted that the investigation has uncovered some operational weaknesses. TA Research, which maintained a 'sell' call on the stock, has revised the company's ESG rating to three stars from four, impacting the TP, which has been lowered to RM5.59 from RM5.76 with unchanged earnings estimates. 'We are undoubtedly surprised by the development, particularly given SunCon's strong reputation for corporate governance and its established suite of compliance policies,' it said, adding that while the reputational damage cannot be quantified at this juncture, there seems to be no systemic failure, but new clients may impose more stringent due diligence or require additional assurance on project execution standards. CGS International Research has maintained a 'hold' call on the stock, noting that the valuation of 22 times the financial year ending Dec 31, 2026 price-to-earnings 'is not compelling at a premium to the sector average of 14 times, with the MACC inquiry likely to be a share price overhang until it concludes'. It pointed out that investors ascribed a premium to the return-on-equity DC exposure for more meaningful earnings growth beyond FY25. The TP was lowered to RM5.50 from RM5.90. SunCon's net profit for the first quarter of financial year ended March 31, 2025 (1Q25) surged to RM75.72mil, up from RM32.40mil in the same period last year. Revenue climbed 132% to RM1.40bil compared with RM604.80mil previously, underpinned by robust performance from the construction segment. In a statement on its first quarter financial performance announced in May, the company said its construction segment delivered a remarkable improvement in performance, with revenue rising 152% from RM543.6mil in 1Q24 to RM1.37bil in 1Q25.
Free Malaysia Today
22-07-2025
- Business
- Free Malaysia Today
Sentiment sours for Sunway Construction after MACC probe
Sunway Construction's order book stands at RM7.9 billion as at June 2025, with data centres making up 49%. (Sunway pic) PETALING JAYA : Research houses said Sunway Construction Group Bhd's (SunCon) potential of winning multi-billion-ringgit data centre jobs may be affected by an anti-graft investigation into an employee's dealings with subcontractors. Its shares tumbled as much 17.6% yesterday after it announced in a bourse filing the Malaysian Anti-Corruption Commission (MACC) had initiated an investigation on the employee. The stock continued falling today and was down 3.5% or 19 sen to RM5.30 at 4.15pm, valuing the company at RM6.96 billion. Despite the fall, the shares have surged 40% over the past six months on the back of its ability to compete successfully for data centre construction jobs. However, the falling share price is the least of its worries compared to the potential damage the episode may inflict on the Sunway Group's squeaky-clean image. The construction company is a subsidiary of Sunway Bhd, which has a 54.55% stake through Sunway Holdings Sdn Bhd. In a note today, TA Research said it was 'surprised by the development, particularly given SunCon's strong reputation for corporate governance' and its established suite of compliance policies. The research house said the reputational damage inflicted on the group is not quantifiable at this juncture, and the negative news flow may weigh on its near-term ability to secure new contracts. This uncertainty is likely to persist until the investigation is concluded, it added. 'Furthermore, we do not rule out the possibility that new clients may impose more stringent due diligence or require additional assurance on project execution standards – potentially leading to delays in new project awards. 'Against this backdrop, we remain cautious on the group's near-term job replenishment prospects,' said TA, which maintained its 'sell' call and cut its target price (TP) to RM5.59 from RM5.76 previously. Nevertheless, TA said it was reassured the case appears to involve misconduct in a personal capacity, rather than 'systemic failure'. 'We believe it is unlikely to compromise SunCon's relationships with existing clients,' it added. Advantage to rivals Meanwhile, CGS International noted that while SunCon maintains this is an isolated incident with no senior management involvement, reputational risks could temporarily provide advantage to rivals like Gamuda Bhd and IJM Corp Bhd. 'This may impact some of SunCon's ongoing tenders, especially in the data centre space, of which we understand there are seven to eight totalling RM14 billion,' it said. However, given its strong brand equity and parentage, CGS thinks SunCon will be able to recover from this without impacting its new order wins materially over the longer term. It noted that SunCon's year-to-date FY2025 wins amount to RM3.5 billion and its order book stood at RM7.9 billion as at June, with data centres making up 49%. The revelation of the anti-graft watchdog's probe on the SunCon employee comes on the heels of MACC's investigation dubbed Op Ways since last Thursday, over alleged corruption involving a data centre construction project tender in Johor worth some RM180 million. The operation resulted in the arrest of a manager of a construction company, alongside his wife and two men in the Klang Valley.
BusinessToday
22-07-2025
- Business
- BusinessToday
SunCon Share Sell-Off, Investors Overreacting
RHB Investment Bank Bhd (RHB Research) and MBSB Investment Bank Bhd (MBSB Research) have both reiterated their BUY calls on Sunway Construction Group Bhd (SunCon), citing strong fundamentals and long-term growth prospects despite a recent corruption probe involving a single employee. RHB Research has trimmed its target price to RM6.55 from RM6.80, implying a 19% upside, while MBSB Research maintains its TP at RM6.44, valuing the stock at 29 times FY26 forecast earnings per share. The Malaysian Anti-Corruption Commission (MACC) recently arrested a SunCon contracts manager under an anti-graft operation known as Op Ways. The employee, suspended pending termination, allegedly received bribes in connection with subcontract awards. Management has clarified that the investigation is limited to the individual and does not implicate SunCon as a corporate entity. Analysts were briefed following the announcement and concluded that the incident is isolated, with no evidence of systemic failure within SunCon's governance framework. According to MBSB Research, SunCon's internal controls remain robust, reinforced by its ISO 37001:2016 Anti-Bribery Management System certification obtained in May. The group's subcontract awards since 2022 have all been executed through e-bidding platforms that prioritise transparency and cost efficiency. The company has undergone recent audits by MRT Corp, Ernst & Young and SIRIM, all of which confirmed full compliance with its internal procedures. RHB Research echoed similar sentiments, noting that SunCon's proactive stance in cooperating with authorities and engaging legal counsel underscores its zero-tolerance policy on corruption. The group has also initiated outreach to existing and prospective clients to mitigate any reputational damage and clarify the situation. Although RHB Research lowered SunCon's ESG score slightly from 3.3 to 3.1 due to governance-related adjustments, the research house maintained its confidence in the company's operational resilience and growth trajectory. Both analysts agreed that the company's financials remain unaffected. MBSB highlighted SunCon's outstanding order book of RM7.90 billion as at May 2025, providing multi-year earnings visibility, particularly in the high-growth data centre segment. The group also stands to benefit from potential contract wins under upcoming infrastructure projects such as the Penang LRT, Penang International Airport expansion and MRT3. While SunCon's share price dropped 8.2% to RM5.49 following news of the investigation, analysts see the selloff as a knee-jerk reaction. RHB Research noted that the stock is still trading below its historical P/E range observed during the previous construction cycle, suggesting further upside if sentiment recovers and new project wins materialise. With no disruption to ongoing construction activities and a strong pipeline of internal and external tenders, both RHB and MBSB consider SunCon well-positioned to weather the current episode and continue delivering earnings growth into FY26. Related
New Straits Times
22-07-2025
- Business
- New Straits Times
SunCon brushes off corruption concerns, reaffirms growth outlook
KUALA LUMPUR: Sunway Construction Group Bhd (SunCon) has acted swiftly to reassure investors and clients, dismissing concerns over its long-term prospects following the remand of an employee by the Malaysian Anti-Corruption Commission (MACC) over subcontractor-related dealings. In an investor briefing led by group managing director Liew Kok Wing, SunCon firmly dismissed concerns over its operational integrity and future prospects. The company clarified that the case involves a single contract manager and a few subcontractors – not the company itself. It stressed that the incident is isolated and that SunCon is fully cooperating with the authorities, according to a research note by Maybank Investment Bank (Maybank IB). The employee has been suspended and will be terminated after the remand period, SunCon confirmed. SunCon also reported that it 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 strengthen investor confidence, SunCon highlighted that it obtained Anti-Bribery Management Systems (ABMS) certification just two months ago. The certification was audited by SIRIM and external parties, reinforcing the group's governance credentials. It also reaffirmed that subcontracting tenders are conducted electronically and awarded strictly based on the lowest bid among local companies. "It believes its standard operating procedures (SOPs) are sound and the aforementioned case involved just that 1 employee. SCGB revealed that it conducts subcontracting tenders electronically and only awards to local companies that offer the lowest bid," Maybank IB said. 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. The research house reaffirmed its "BUY" recommendation on SunCon, maintaining a target price of RM6.72, premised on a 24x fiscal year 2026 price-to-earnings ratio and anchored by annual job win expectations of RM7 billion. The stock was among the most actively traded in the morning session, with over 11.69 million shares changing hands. As of 10.24am, the stock fell to an intraday low of RM5.29, down 20 sen or 3.6 per cent from Monday's close of RM5.49.
