PETALING JAYA: RHB Research is initiating coverage on Sunway Healthcare Holdings Bhd (SHH) with a bullish outlook, forecasting sustained earnings growth over the next three years as hospitals mature and expansion at existing facilities boosts capacity.
As such, the brokerage is recommending a “buy” on the healthcare provider, with a target price of RM2.14.
This implies 30.6 times financial year 2027 forecast enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/Ebitda).
RHB Research expects SHH to deliver a three-year compounded annual growth rate or CAGR of 25.9% in profit after tax and minority interests, supported by the ramp-up of hospitals that began operations over the past two years, as well as brownfield expansion across its existing network.
“We have not fully accounted for potential effects (such as recognition of investment tax allowances) that could affect the tax rate in the forecast period,” it wrote in its report.
RHB Research explained its premium valuation on SHH is warranted by the group’s exceptional execution track record, superior margins and peer-doubling growth rates.
The research house described SHH as “the fastest-growing premium asset within our healthcare coverage”, citing its position as a core FBM KLCI constituent and free float of less than 18%, which it believes creates an institutional scarcity premium.
It also said the group’s domestically focused and defensive business model complements its broader market strategy.
RHB Research noted that SHH operates five hospitals anchored by Sunway Medical Centre Sunway City Kuala Lumpur, which it described as Malaysia’s largest and top-ranked private quaternary hospital.
The brokerage said the investment case rests on three competitive strengths: a strategic focus on cardiology, oncology, neurology, gastroenterology and orthopaedics specialties, a vertically integrated ecosystem that helps generate patient demand for new hospitals, and strong relationships with insurers that support patient volumes.
