HLIB Research said SGH’s listing is likely to be one of the largest in terms of market capitalisation in Malaysia.
PETALING JAYA: The listing of Sunway Bhd
’s healthcare arm, Sunway Healthcare Group (SHG), could take place by the end of financial year 2025 (FY25) or early FY26.
According to Hong Leong Investment Bank (HLIB) Research, Sunway has initiated work on SGH’s listing, which is likely to be one of the largest in terms of market capitalisation in Malaysia.
“We gathered that Sunway had recently appointed the relevant investment banks to initiate work on the listing of SHG.
“With this development, we believe SHG is on track for a potential listing by end-FY25 or early FY26,” it said in a note to clients yesterday.
The research house noted that recent private healthcare deals have been transacted at 20-25 times the enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/Ebitda), setting a valuation floor for SHG’s initial public offering (IPO), with potential to exceed this range.
“It would be strategically prudent for Sunway and GIC Pte Ltd to only consider a listing that matches or exceeds this valuation,” HLIB Research stated.
Singapore’s sovereign wealth fund GIC acquired a 16% stake in the healthcare division in 2021.
“Both Sunway and GIC could realise higher value through private sales if the IPO valuation does not meet this threshold, suggesting a floor valuation of at least 20 times EV/Ebitda and the potential to reach above 25 times.
“In our sum-of-the-parts (SOP) valuation, we value Sunway’s 84% stake in SHG at RM17.2bil, based on 25 times FY26 EV/Ebitda,” it explained.
The research house said the potential listing could unlock value for Sunway shareholders.
“Drawing parallels to the 2015 IPO of Sunway Construction Group Bhd (SunCon) where Sunway shareholders received SunCon shares along with a special dividend funded by the IPO proceeds, we believe Sunway shareholders should also similarly be able to enjoy benefits from this listing exercise.
“However, the specifics of this structure remain subject to Sunway’s final decision,” it added.
On operational updates, HLIB Research said Sunway recently expanded its healthcare footprint with the opening of its fourth hospital, Sunway Medical Centre Damansara (SMCD) in December 2024.
According to the research house, in less than three weeks, SMCD has demonstrated strong community acceptance, serving over 2,400 patients, performing more than 50 surgeries across various specialties, and registering over 500 health screening sign-ups.
“Looking ahead, the group plans to launch its fifth hospital, Sunway Medical Centre Ipoh, in the second quarter of 2025.
“This facility is expected to replicate the success of SMC Penang by addressing the needs of the underserved community in Ipoh, further solidifying SHG’s growth trajectory and reinforcing the long-term prospects of Sunway’s healthcare division,” it said.
HLIB Research maintained its “buy” call on the company, with an unchanged target price of RM5.75 per share, based on SOP-derived valuation.
The research house said that with the group’s expanding presence in the Malaysian economy, the stock serves as a good proxy for the domestic market, which is entering a new growth phase.
In an environment of heightened geopolitical uncertainty and potential policy risks, particularly with the upcoming changes under the Donald Trump administration, Sunway’s predominantly domestic-focused business model makes it an appealing investment, given that it is less exposed to such risks.
