According to Maybank Investment Bank, Sunway Group Berhad ranks high on sustainability, with its detailed policies in place. The investment bank says while it has assigned an above-average overall score of 74 based on its aggregated quantitative/qualitative /target-based metrics, Sunway needs to make headway in improving its quantitative “E” and “S” metrics, particularly the lost-time injury frequency.
As of now, the stock remains a HOLD with an MYR1.63 TP. BUY for the sector are: ECW MK (CP: MYR0.67; TP: MYR0.81), SDPR (CP: MYR0.445, TP: MYR0.58), TILB (CP: MYR0.76, TP: MYR0.86) and ECWI (CP: MYR0.405, TP: MYR0.66).
The construction group has a comprehensive sustainability policy in place and its overall ESG score of 74 (out of 100) is above average on the ESG rating. This is in line with Sustainalytics’ score of Sunway’s ESG risks at 13.6, putting it in the “Low” risk rating category. SWB fetches better ESG scoring as compared to its peer, Gamuda’s 68/35.3 (“High” risk category) (GAM MK, BUY, CP: MYR3.81, TP: MYR3.90) in MIGB/ Sustainalytics’ ESG risk scoring systems.
Where SWB could perform better would be in some of its social practices such as reducing lost-time injuries (LTI). In 2021, there was one fatality although no high-consequence work-related injuries were reported. There was also another case of reportable LTIs associated with its workers being hit by an object and four incidences associated with slips, trips, and falls.
Sunway said it aims to reduce residual emissions by 45% by 2030 and achieve net zero carbon emissions by 2050. From now until 2030, SWB is focusing to reduce residual emissions by 45% by improving efficiency and using energy substitution to get to net zero carbon emissions by 2050, it will focus on carbon offset technology such as carbon storage and capture as well as investment in large-scale renewable energy.
The research house values Sunway at MYR1.63 on an unchanged FY23E PBV of 0.8x. While Sunway’s property development business may be hit by higher interest rates, the impact should be cushioned by better performance from the other businesses e.g. property investment, leisure, and healthcare divisions post the reopening of international borders. The stock is fairly-priced.
