Broker: UOB Kay Hian
Date of Report: Friday, 18 July 2025

Sunway Berhad: Broad-Based Growth, Healthcare IPO Upside, and Robust Property Prospects in 2025

Overview: Diversified Conglomerate with Strong Catalysts

Sunway Berhad, a leading Malaysian conglomerate, continues to impress with its diversified business model that spans property development, property investment, leisure, hospitality, construction, trading and manufacturing, quarry, building materials, and healthcare. The group maintains its BUY rating, with a target price of RM5.81, implying a healthy upside of 16.4% from the current share price of RM4.99.

Key near-term catalysts include:

• Potentially stronger-than-expected construction contract wins
• Conversion of Medini land to freehold status
• A highly anticipated healthcare segment listing slated for early 2026

Stock Performance and Major Shareholders

• Market Cap: RM31.06 billion (US\$7.31 billion)
• Shares Issued: 6,225.4 million
• 52-Week Range: RM5.10 / RM3.51
• 1-Year Price Return: +21.1%
• Major Shareholders:
  • Sungei Way Corp Sdn Bhd: 45.5%
  • Jef-San Enterprise Sdn Bhd: 10.2%
  • Employees Provident Fund (EPF): 8.11%

Key Investment Highlights

• Strong Construction Pipeline: Management remains confident in achieving a RM6 billion orderbook target for 2025, up from RM3.5 billion year-to-date. The construction division is poised for multi-year earnings growth, with accelerated billing from in-house infrastructure and data center (DC) projects.
• Landbanking and Property Development: Sunway’s property segment is underpinned by robust sales from phased launches, ongoing land conversion in Medini, and strategic landbank replenishment. Exposure to the Johor-Singapore Special Economic Zone (JS-SEZ) provides defensive qualities amidst rising geopolitical uncertainties.
• Healthcare Expansion and Upcoming IPO: The healthcare arm is in expansion mode, targeting over 3,000 licensed beds by 2030 (from 1,647 as of April 2025) and entering new regional markets. The planned early-2026 healthcare listing is expected to unlock significant shareholder value, with a potential market valuation of RM16-19 billion and proceeds of RM4.8-5.7 billion (based on a 30% stake sale).
• Singapore Footprint: The group secured the Chuan Grove site in Singapore via a joint venture with Sing Holdings (35:65 split), marking its fourth Singapore residential project. The high-rise development (about 550 units, GDV est. S\$1.4 billion or RM4.7 billion) is scheduled for launch in 2H26, with Sunway’s share estimated to contribute S\$10-15 million (RM33-50 million) annually over five years.
• Transit-Oriented Developments (TODs): Sunway is gaining momentum in mixed-use TODs, with new land acquisitions in Bukit Chagar RTS and Seremban Sentral. Its integrated approach and in-house construction capabilities position the group to capitalize on future TOD opportunities.

Financial Snapshot: Key Metrics and Projections

Segmental Profit Contributions (1Q25)

• Property Development: 11%
• Property Investment: 30%
• Construction: 38%
• Trading & Manufacturing: 10%
• Quarry: 5%
• Healthcare: 4%
• Building Materials & Others: 2%

Geographical Property Sales (1Q25)

• Klang Valley: 51%
• Singapore: 36%
• Johor: 10%
• China: 1%
• Northern Region: 2%

In-Depth Segment Analysis

Healthcare: Expansion and IPO Value Creation

The healthcare division is a key growth driver, targeting 3,000+ beds by 2030, with ongoing expansion at key hospitals and new market entries in Iskandar (350 beds), Kota Bahru (210 beds), Putrajaya (325 beds), and Seremban. A digital medical village in Kuching is also on the horizon.

Key drivers for growth:

• Aging population and rising non-communicable diseases
• Momentum from Tourism Malaysia Year 2026, especially in medical and wellness tourism (targeting 15% foreign patient mix by end-2025, up from 13% in 1Q25)

The upcoming healthcare IPO is expected to fetch a market cap of RM16-19 billion (22-26x 2027 EBITDA of RM765 million), with Sunway likely retaining a majority stake. Proceeds from a 30% stake sale could reduce group net gearing dramatically, enhancing financial flexibility for further property development.

Sunway’s 84% stake in its hospitals is currently valued at RM14 billion (25x 2026F EV/EBITDA), based on an estimated 2026 EBITDA of RM657 million, assuming 2,200 beds, 80% occupancy, RM1.5 million revenue per bed, and 26% EBITDA margins.

Singapore Developments: Solid Pipeline and Market Timing

The Chuan Grove acquisition, a 99-year leasehold site near Lorong Chuan MRT, will see three towers with around 550 units, targeting launch in 2H26. Other Singapore projects include:

• The Continuum (launched 2Q23, 80% take-up)
• Terra Hills (launched 1Q23, 40% take-up)
• Tampines Street 94 (launch 1H26)
• Executive condominium segment: Otto Place (sales start 19 July 2025), following Novo Place (launched 4Q24, >80% take-up)

Recent launches coincide with declining Singapore Overnight Rate Average, supporting a favorable environment for private property demand.

Construction: Multi-Year Growth Outlook

Sunway’s construction arm is set for continued earnings growth, driven by in-house infrastructure projects and robust data center contract flows. The company rebuts concerns about a slowdown in DC contract awards, reporting smooth progress and a clear pathway to the RM6 billion orderbook target for 2025.

Mixed-Use Transit-Oriented Developments

The group is well-positioned in the mixed-use TOD space, with recent landbank additions at Bukit Chagar RTS and Seremban Sentral. Sunway’s expertise in integrated asset management and construction gives it a competitive edge in future TOD opportunities.

Valuation and Recommendation

The target price remains at RM5.81, based on sum-of-the-parts (SOTP) valuation:

This values Sunway at 32x 2026F PE and 30x 2027F PE (over +2SD above its five-year mean), and 2.3x 2026F PB (+2SD above its 10-year mean).

ESG Initiatives: Sustainability and Good Governance

• Environmental: Photovoltaic solar panels installed across most properties.
• Social: Launched the Sunway Cancer Support Fund.
• Governance: Strong transparency, with robust anti-bribery and anti-corruption policies.

Conclusion: Sunway Berhad Remains a Top-Tier Diversified Play

With broad-based earnings strength, multiple value-unlocking catalysts in 2025 and beyond, and a resilient, diversified business model, Sunway Berhad stands out as a compelling investment for those seeking exposure to Malaysia’s dynamic property, construction, and healthcare sectors.