Broker: UOB Kay Hian
Date of Report: Thursday, 28 August 2025
Sunway Berhad Q2 2025 Financial Analysis: Missed Expectations but Strong Launch Pipeline and Healthcare Catalyst Ahead
Overview: Sunway Berhad’s Diversified Strength Amid Cost Pressures
Sunway Berhad, a leading Malaysian conglomerate, continues to demonstrate resilience across its diversified business lines, including property development, investment, leisure, hospitality, construction, trading, manufacturing, quarry, building materials, and healthcare. Despite missing earnings expectations for Q2 2025 due to higher costs, Sunway’s underlying sales momentum remains robust, fueled by strong property launches and upcoming catalysts such as land conversion and a healthcare division listing.
Key Stock Data and Performance Snapshot
- Share Price: RM4.97
- Target Price: RM5.70 (previous TP RM5.81), implying 14.7% upside
- Market Cap: RM30,940 million (US\$7,305.8 million)
- Major Shareholders: Sungei Way Corp Sdn Bhd (45.5%), Jef-San Enterprise Sdn Bhd (10.2%), EPF (7.5%)
- Sector: Industrials (GICS)
- Bloomberg Ticker: SWB MK
- Shares Issued: 6,225.4 million
- 52-week High/Low: RM5.16 / RM3.84
- YTD Performance: +3.8%
Q2 2025 Results: Missed Expectations, but Sales on Track
Sunway’s core net profit for Q2 2025 was RM232 million, up 13% QoQ but down 1% YoY, on revenue of RM2,562 million (+8% QoQ, +62% YoY). The first half’s core net profit reached RM437 million, accounting for just 40%–41% of full-year forecasts. The shortfall stemmed from a higher tax rate and unexpectedly high property development costs, though sales momentum remains strong.
| Metric |
2Q25 |
1Q25 |
2Q24 |
YoY Change |
QoQ Change |
| Revenue (RMm) |
2,561.6 |
2,367.0 |
1,579.9 |
+62.1% |
+8.2% |
| Core Net Profit (RMm) |
231.7 |
205.4 |
234.2 |
-1.1% |
+12.8% |
| PATAMI (RMm) |
273.0 |
190.6 |
270.5 |
+0.9% |
+43.2% |
Segmental Performance: Property, Construction, Investment, Healthcare
| Segment |
2Q25 Revenue (RMm) |
2Q25 Pre-tax Profit (RMm) |
YoY Change (Revenue) |
YoY Change (PBT) |
| Property Development |
351.4 |
52.2 |
-5.5% |
-25.6% |
| Construction |
1,268.6 |
134.8 |
+232.8% |
+157.0% |
| Property Investment |
223.0 |
76.3 |
-3.5% |
-11.4% |
| Healthcare (PAT, equity accounting) |
N/A |
35.5 |
N/A |
-28.0% |
Property Development: Resilient Sales Amid Margin Pressure
- 2Q25 revenue and pre-tax profit for property development declined YoY, reflecting lower progress billings and profit recognition from both local and overseas projects.
- 2Q25 property sales surged to RM745 million (+34% QoQ), bringing 1H25 sales to RM1.3 billion.
- For the first seven months, sales reached RM2.3 billion, with launches at RM1.5 billion, primarily driven by Otto Place’s launch (RM1.2 billion GDV, 91% take-up as of August).
- Strong unbilled sales of RM3.7 billion continue to support the segment’s resilience.
- Upcoming launches in 4Q25 to total RM2.04 billion GDV from Sunway Serene 2, Sunway Cochrane, Sunway Majestic, and Sunway LakeHills.
Healthcare Segment: Expansion and Strategic Listing
- Healthcare’s 2Q25 net profit share dropped 28% YoY to RM36 million due to the gestation of two new hospitals.
- Excluding startup impact, segment profit grew 17% YoY, led by SMC Sunway City, SMC Velocity, and SMC Penang.
- Sequential improvement (+12% QoQ) supported by increased licensed beds (1,647 vs 1,482 in 1Q25) and higher occupancy (65% vs 62%).
- Healthcare listing targeted for early 2026, with an estimated market valuation of RM16–19 billion (22–26x 2027 EBITDA).
- Potential proceeds (assuming 30% stake sale) could reduce net gearing to 5–11%, unlocking substantial debt headroom for property development expansion.
Construction Segment: Data Centre Projects Drive Growth
- Pre-tax profit for construction surged to RM135 million (+157% YoY) in 2Q25, propelled by data centre project progress.
- Data centre projects constitute 45% of the current orderbook (RM6.7 billion), and are expected to anchor segment earnings for 2025.
Valuation, Earnings Revision, and Investment Recommendation
- Earnings estimates revised down by 11% for 2025, 1% for 2026, and 2% for 2027 due to lower margin assumptions.
- Target price reduced to RM5.70 (from RM5.81), based on SOTP valuation, implying 33x 2026F PE and 30x 2027F PE (+2SD above five-year mean), and 2.4x 2026F PB (+2SD above 10-year mean).
- BUY rating maintained, supported by strong launch pipeline and upcoming healthcare listing catalyst.
Sunway Berhad Key Financials and Metrics
| Year |
Net Turnover (RMm) |
EBITDA (RMm) |
Operating Profit (RMm) |
Net Profit (Adj.) (RMm) |
EPS (sen) |
PE (x) |
Dividend Yield (%) |
ROE (%) |
| 2023 |
6,136.2 |
808.0 |
666.6 |
750.6 |
12.6 |
39.3 |
1.1 |
7.0 |
| 2024 |
7,882.5 |
1,031.4 |
887.3 |
1,005.8 |
15.1 |
32.9 |
1.2 |
9.0 |
| 2025F |
8,960.0 |
1,214.4 |
1,019.1 |
976.5 |
14.7 |
33.9 |
1.2 |
8.5 |
| 2026F |
9,488.5 |
1,428.6 |
1,197.0 |
1,181.9 |
17.7 |
28.0 |
1.4 |
10.0 |
| 2027F |
10,579.1 |
1,647.4 |
1,376.6 |
1,277.6 |
19.2 |
25.9 |
1.5 |
10.4 |
Geographical Property Sales Breakdown (2Q25)
- Klang Valley: 44%
- Johor: 22%
- Singapore: 31%
- China: 1%
- Northern Region: 2%
Segmental Pre-Tax Profit Contribution (2Q25)
- Property Development: 13%
- Property Investment: 19%
- Construction: 34%
- Trading & Manufacturing: 7%
- Quarry: 4%
- Healthcare: 9%
- Building Materials & Others: 14%
Sum-of-the-Parts (SOTP) Valuation Breakdown
| Segment |
Value (RMm) |
% of SOTP |
Remarks |
| Property Development |
12,225 |
32% |
7% discount to RNAV |
| REIT (40.9% stake) |
2,871 |
8% |
TP RM2.05, DDM |
| Construction (54.4% stake) |
4,410 |
12% |
TP RM6.27, 21x 2026F PE |
| Quarry & Building Materials |
462 |
1% |
15x PE 2026F |
| Trading |
1,092 |
3% |
15x PE 2026F |
| Investment Properties |
3,390 |
9% |
Market Value |
| Healthcare (84% stake) |
13,800 |
36% |
25x EV/EBITDA 2026F |
| Less: Holding Co (debt)/cash |
-292 |
-1% |
|
| Total SOTP Value |
37,956 |
|
|
| Enlarged share base (m) |
6,660 |
|
|
| Target Price (RM) |
5.70 |
|
|
ESG Initiatives: Environmental, Social, and Governance Updates
- Environmental: Installation of photovoltaic solar panels at most properties.
- Social: Launch of Sunway Cancer Support Fund.
- Governance: Commitment to transparency and anti-bribery/anti-corruption policy.
Conclusion: Sunway’s Outlook Remains Positive Despite Near-Term Challenges
Sunway Berhad’s diversified portfolio continues to offer resilience, with robust property sales, significant construction orderbook growth, and an expanding healthcare segment poised for a landmark listing. While Q2 2025 earnings missed expectations due to higher costs, near-term catalysts and prudent financial management position Sunway for sustained growth. Investors can look forward to the healthcare listing, conversion of Medini land, and a ramp-up of property launches, all of which should unlock further shareholder value. The stock remains a BUY with a target price of RM5.70.
Important Disclosures and Analyst Certification
UOB Kay Hian analysts certify that their views are independent and unbiased, and compensation is not linked to recommendations. The report is distributed under local regulations in each market.
End of Report
