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Investing.com - Nomura/Instinet downgraded Sunway Construction (KLSE:SCGB) from Buy to Neutral with a price target of MYR5.90, citing uncertainty around data center contracts.
Data center contracts currently make up 50% of Sunway Construction’s orderbook, with the company expecting a significant portion of FY25F/26F new projects to come from these contracts, according to Nomura.
The research firm noted that data center rollout has been a key pillar of Sunway Construction’s orderbook and share price growth narrative since 2024, but near-term uncertainty exists until certain rules are clarified.
Nomura made no changes to orderbook or earnings forecasts, acknowledging the possibility that U.S. hyperscalers or non-AI cloud providers might continue their buildout in Malaysia with export licenses or if restrictions ease.
The downgrade comes as the stock trades approximately 2% above Nomura’s unchanged target price, with the firm suggesting investors lock in gains and wait for clarity to emerge.
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