Economic recovery and border reopening will benefit Sunway


SUNWAY Bhd is poised to record growth and propel its business to the next phase as all of its business segments are expected to benefit from the economic recovery and reopening of borders.

Hong Leong Investment Bank Bhd (HLIB Research) said in a note that the group has multi levers of growth, particularly with its fast-expanding crown jewel, the healthcare segment.

“While the market may value the group as a conglomerate with holding discount, we reckon that there is a rerating opportunity for Sunway when the market fully appreciate the group’s integrated business model. Each segment is well managed in its own regard while at the same time also complements the overall group’s business model resulting in synergistic value larger than the sum-of-parts.

“Its efforts to expedite the expansion of its healthcare segment with its new strategic partner GIC Pte Ltd, will culminate in the separate listing of the healthcare unit to help unlock value in the group. Sunway remains our top pick given its well-integrated property, construction and building material operations,” it said after a virtual meeting with the group.

The firm maintained its ‘Buy’ call on the group with an unchanged target price of RM2.58.

Under its healthcare segment, HLIB Research noted that the group has a hub and spoke model for the segment where Sunway Medical Centre (SMC) in Sunway City, Selangor, is the centralised hub which has the top surgeons, cutting edge equipment and well organised support services to provide specialised and sophisticated medical services.

Sunway’s outreach in medical services is also complemented by the recently acquired pharmacy chain, with more than 100 outlets that have been renamed as Sunway Multi Care.

Under this hub, HLIB Research said the group will be able to generate cross-referrals to maximise utilisation rate, refer tertiary care patients to SMC in Sunway City, widen its patients reach through its large geographical presence and enjoy economies of scale as it capitalises on the group’s centralised planning and procurement efforts.

Sunway’s expansion pipeline for 2022 includes SMC Seberang Jaya, Penang, which is slated to open in the fourth quarter of 2022 (4Q22) and SMC Sunway City Tower D where the first 15 floors are medical suites (180 units) while 16th to 30th floors are for assisted living patients.

On its property development segment, the firm added that the group will focus on land banking activities in the Klang Valley region, with greater focus in Kuala Lumpur due to the less stringent regulatory and faster time to market.

“On its theme park segment, 1Q is a seasonally weaker quarter. Having said that, management expects 1Q22 to be stronger on a year-on-year basis. Hotel segment should continue to show gradual improvement moving forward, thus, operating losses should narrow.

“Sunway Resort, the group’s main hotel. is currently under refurbishment and expects to open by phases from June 2022 onwards. The resumption of this hotel’s operations should benefit other facilities and segments such as malls and the theme park within Sunway City as visitors extend their stay, thus increasing the average spendings per visitor,” it added.