PETALING JAYA: The domestic economy’s new phase of growth will help boost demand for property, which Sunway Bhd
is leveraging to spur the company’s property development arm’s launches.
Hong Leong Investment Bank (HLIB) Research said the company would be exceeding its financial year ending Dec 31, 2024 (FY24) effective launch target with over RM2bil in launches driven by an additional tower launch in Sunway V3 and the accelerated launch of the Novo Place EC in Singapore.
“Property development earnings in the second-half of FY24 (2H24) are projected to be strong, led by EC Parc Central Tampines (RM120mil to RM130mil in the third quarter ended Sept 30, 2024) and more meaningful contributions from The Continuum, Terra Hills, and the highly earnings-accretive Sunway V3,” it noted in a report.
The research house has maintained a “buy” call on the stock with a revised target price of RM5.45 from RM5.15.
This is based on a sum-of-parts valuation factoring in a higher Sunway-REIT target price and lower revised net asset value discount of 20% from 30% for property reflecting accelerated development at Sunway City Iskandar Puteri and imminent contributions from a significant portion of the property investment portfolio.
“We increased our FY24 to FY26 forecasts by 10.3%, 15.8% and 1.1% to factor in higher property development contribution and data centre land sale in FY25,” it said.
It said with the company’s “widening exposure in the Malaysian economy, having exposure to the stock is tantamount to owning a piece of the domestic economy which is now entering a new phase of growth”.
HLIB Research said Sunway Medical Centre Sunway City (SMCKL), the largest private hospital in South-East Asia, has untapped potential.
This was as SMCKL’s revenue per bed of RM1.3mil was lower than Bangkok’s Bumrungrad Hospital’s RM5.7mil.
SMCKL, which currently operates 724 beds, is undergoing an expansion to 1,086 beds, rivalling Bumrungrad’s 580 beds.
“Over the next few years, SMCKL has the potential to significantly grow its international patient base, bringing its revenue per bed closer to Bumrungrad’s levels,” it said, pointing out that international patients form 67% of Bumrungrad’s clientele.
On the company’s plans to list its healthcare arm in Singapore, HLIB Research said it would only be strategic to consider a listing only if valuations match or exceed recent private healthcare transactions of 20 to 25 times enterprise value/earnings before interest, taxes, depreciation and amortisation or Ebitda.
