MIDF Amanah Investment Bank Bhd (MIDF Research) has reiterated its NEUTRAL call on Sunway Bhd with an unchanged target price of RM4.86, noting that while its healthcare segment stands to benefit from upcoming policy initiatives, the stock’s upside appears limited as most positives are already priced in.
The government’s proposal to allow Employees Provident Fund (EPF) Account 2 withdrawals for voluntary health insurance is expected to benefit Sunway Healthcare Group (SHG), a subsidiary of Sunway Berhad. According to MIDF, the scheme, which aims to improve access to private healthcare for 16 million EPF members, could lead to an increase in outpatient visits and hospital admissions. This is likely to cushion the mild negative impact from the implementation of the Diagnosis-Related Group (DRG) payment model, which is set to apply to both public and private hospitals in efforts to control medical inflation.
Despite a strong showing in FY24 with earnings reaching RM1.06 billion, a 51.3% year-on-year increase driven by lumpy contributions from Singapore projects. MIDF Research expects earnings to normalise in FY25. Sunway’s healthcare segment, which contributed 14% to group profit before tax (PBT) in FY24, saw its share decline to 10% in the first quarter of FY25 due to startup losses from the new SMC Damansara and pre-operational costs at SMC Ipoh.
The research house highlighted that SHG currently operates 1,647 licensed beds and plans to increase this to 3,000 by 2030 through hospital expansions. In April 2025, the group signed an agreement with Putrajaya Holdings to develop a 325-bed hospital in Putrajaya. It is also exploring a new facility in Seremban as part of a transit-oriented development project. These efforts, along with Malaysia’s growing medical tourism appeal, are expected to drive long-term earnings growth for SHG.
On the property front, sales are anticipated to improve following RM554.7 million achieved in 1QFY25, with remaining launches for the year having a combined gross development value (GDV) of RM3.7 billion. This is expected to help Sunway reach its revised sales target of RM3.6 billion for FY25. Growth from the group’s construction and property investment divisions will also support performance going forward.
MIDF Research noted that the listing of Sunway Healthcare Group, likely in the first half of FY26, remains a near-term catalyst. However, the research house maintained its neutral stance, citing limited share price upside at current levels.
