Toyo Ventures extends decline after losing Song Hau 2 contract

KUALA LUMPUR (July 5): Shares of Toyo Ventures Holdings Bhd (KL:TOYOVEN) extended their decline on Friday, after the company confirmed the termination of the Song Hau 2 thermal power plant project by the Vietnamese government.

Toyo Ventures fell as much as 12% or 13 sen to 93 sen in early morning trades. The stock was trading at 97.5 sen at 9.15am, valuing the company at RM129 million after 1.37 million shares changed hands on Bursa Malaysia. The stock had plunged 23% on Thursday (July 4), following news reports from Vietnam on the termination.

Sunway Construction Group Bhd (KL:SUNCON), which was partnering a Vietnamese firm to build the power plant, was also slightly down following Toyo’s confirmation that its unit didn’t meet the deadline to secure financing for the project. The stock slipped 1.9% to as low as RM4.05. 

TA Securities, which covers Sunway Construction, said it was surprised by the news, as the research house had anticipated an extension of deadline since Toyo Ventures just secured a financing facility of US$980 million last month.

No institutional analyst covers Toyo Ventures. The stock had already lost 33% from RM1.30 at the end of 2023, before Thursday’s precipitous drop.

The termination, however, should not impact SunCon’s earnings, as the work has yet to start and the project is also not part of the company’s orderbook replenishment target for this year, according to TA Securities.

Additionally, SunCon’s current outstanding orderbook of RM7.9 billion may provide earnings visibility over the next three years, said RHB Investment Bank (RHB IB). “The group may be able to focus on delivering more data centre jobs that constitute around 50% of its outstanding orderbook,” the house noted.

Both TA Securities and RHB IB have maintained their “buy” call on SunCon, alongside another nine research houses. Meanwhile, one rated SunCon as “hold” and two have “sell” calls.

Shares of SunCon, which have risen over 100% year-to-date amid a broad rally in the construction sector, have also surpassed the consensus’ 12-month target price of RM3.90, according to Bloomberg.

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