Hong Leong Investment Bank Bhd (HLIB) has downgraded Sunway Healthcare Holdings Bhd (SunMed) to HOLD from Buy, while maintaining its target price of RM2.05, saying the group’s planned expansion in Johor supports its long-term growth strategy although the recent share price rally has limited further upside.
The research house said SunMed’s proposed acquisition of four freehold land parcels in Sunway City Iskandar Puteri, Johor Bahru, for RM45.37 million is a positive move that strengthens its network of tertiary hospitals and expands its presence in Johor.
The land, measuring about 9.918 acres in total, will be used to develop a 410-bed tertiary hospital, which is expected to become the healthcare anchor within Sunway City Iskandar Puteri in the Johor-Singapore Special Economic Zone. HLIB Research noted the larger site also provides room for future hospital expansion and the development of senior living facilities. Construction is expected to be completed between 2030 and 2032.
The acquisition, structured as a related-party transaction, is expected to be completed by the second quarter of 2027 after the vendors complete the transfer and amalgamation of the land titles.
HLIB said the purchase price falls within fair market value based on an independent valuation by Knight Frank Malaysia.
The research house left its earnings forecasts unchanged, noting that the acquisition is expected to raise SunMed’s net gearing only marginally to 28.8% in the financial year ending 2027 from 27.6% currently. It added that there would be no earnings impact during the construction phase as borrowing costs would be capitalised, while contributions from the new hospital are only expected beyond its current forecast period.
As of 10.05 am, the stock price was flat at RM1.92.
