Sunway Construction Group Berhad (SunCon) has reaffirmed its RM6 billion order book replenishment target for FY2026, underpinned by a robust pipeline of data centre (DC) projects, even as construction costs trend higher.
During a recent analyst call, the group said it has secured RM1.2 billion in new jobs year-to-date as of April, while its tender book remains steady at RM17.5 billion, unchanged quarter-on-quarter. Notably, 80% of the tender pipeline is linked to data centre developments, reflecting sustained demand from global technology players.
Data centre momentum continues
SunCon highlighted rising tender activity in key regions such as the Klang Valley and Johor, with potential near-term contract wins expected to materialise in the second quarter of FY2026.
The group also pointed to a possible upside from the expansion of an existing data centre project (JHB1XO Building 2), where piling works have already been completed. The upsizing of existing facilities could contribute an additional RM4 billion to RM4.5 billion in contracts, further strengthening its outlook.
With the completion of 156MW of data centre capacity, including the commissioning of two facilities, SunCon is increasingly positioning itself as a leading contractor in Malaysia’s fast-growing digital infrastructure space.
Rising costs, but margins resilient
Construction costs for new data centre tenders have risen to the upper range of US$8 million to US$12 million per megawatt, reflecting higher input costs, particularly diesel.
Despite this, SunCon said about 50% of its order book operates on a cost-plus basis, which helps mitigate margin pressure. For data centre jobs, around 60% are fixed-price contracts, where cost increases could affect early-stage piling and final commissioning phases.
Analysts note that the group has sufficient buffers to sustain margins, which have historically ranged between 7% and 9%, excluding a one-off spike in late 2025 due to project handovers.
Strong balance sheet and diversified pipeline
As of end-December 2025, SunCon maintained a net cash position of RM1.7 billion, providing financial flexibility to navigate cost volatility and potential market slowdowns.
Beyond data centres, the group is targeting about RM1 billion in internal projects this year, including hospital expansions and a transit-oriented development (TOD) in Johor. Its precast division is also focused on delivering a record RM787 million order book.
Importantly, the company highlighted minimal payment risk, given that its data centre clients consist largely of major US hyperscale operators.
Positive outlook maintained
Analysts have reiterated an “Add” call with a target price of RM7.90, citing SunCon as a key proxy to Malaysia’s data centre growth story.
Potential upside catalysts include new data centre client wins and possible participation in government infrastructure projects, while downside risks stem from project delays and further cost escalation.
Overall, SunCon’s strong pipeline, balance sheet, and positioning in the high-growth data centre segment are expected to support earnings visibility despite a more challenging cost environment.
