LEAP Market-listed Sunmow’s JV bags RM1b road construction contract

• The value of the subcontract is more than four times Sunmow's current market capitalisation of RM232.8 million.

KUALA LUMPUR (Aug 19): Sunmow Holding Bhd (KL:SUNMOW), listed on the LEAP Market, said on Monday that its joint-venture (JV) company had secured a RM1.02 billion road construction contract.

The contract for the Package 4B spans Bukit Pagon to Long Luping under the second phase of the Sarawak-Sabah Link Road project, according to Sunmow in an exchange filing. Sunmow has a 70% stake in the JV, while Kemena Holding Sdn Bhd owns the remaining 30%.

The company has 48 months to complete the contract and has to provide defects liability cover for 24 months from the date of actual practical completion, Sunmow said.

Sunmow, a Sarawak-based company listed on Bursa Malaysia's LEAP Market since November 2021, is controlled by its single-largest shareholder and executive chairman Kong Chiong Miew. His brother Kong Chiong Ung, who is also the managing director of the group, holds a 28.80% stake in Sunmow.

The company offers construction services, including infrastructure development, building structures, refurbishment, drainage systems, road paving, and support services for the oil and gas industry, according to its website.

Kemena, also based in Sarawak, is a general contractor and engages in sales of premix. The company is linked to Pauline Voon Pau Lin and Hii Toh Ing @ Hii Toh Yung, according to CTOS data.

Contract value exceeds market cap

The value of the subcontract is more than four times Sunmow's current market capitalisation of RM232.8 million.

The project will be funded by the company’s internally generated funds, including progress claims, and project financing, though the exact mix will be decided at a later date, the company noted.

Sunmow reported cash and bank balances totalling RM20.92 million, alongside RM1.67 million in fixed deposits held with licensed banks, at the end of December 2023. The company had total term loans amounting to RM4.76 million, with an outstanding balance of RM4.81 million owed to bankers.

Sunmow and Kemena’s JV agreement was signed on April 2 to submit a bid for the project.

The JV, Sunmow said, will provide an opportunity to strengthen its earnings, and fits into its plan to continue to draw on the strength in construction activities and expand into road construction.

For the financial year ended Dec 31, 2023, Sunmow’s net profit climbed 50.32% to RM8.55 million from RM5.69 million a year earlier, as revenue grew 31% to RM115.16 million from RM87.91 million, according to latest available data.

Companies listed on the LEAP Market do not need to submit quarterly financial reports and annual reports. They are only required to come out with semi-annual financial reports and annual audited accounts.

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