KUALA LUMPUR (March 18): Sunway Group has been approached for dual listing for its healthcare arm, Sunway Healthcare Holdings Bhd (KL:SUNMED) in Singapore or Hong Kong.
The proposals from Singapore Exchange and Hong Kong Stock Exchange will be considered later, said its founder and chairman Tan Sri Jeffrey Cheah. The immediate priority is to focus on Sunway Healthcare’s operations following its Main Market debut on Wednesday, he said.
“At this point, there is no compelling reason for us to proceed," he said at a news conference. "When the time is right, we will revisit the idea, but there is no fixed timeline for now."
WATCH: Sunway mulls dual listing for healthcare arm, no timeline set
Another healthcare player with a dual listing is IHH Healthcare Bhd (KL:IHH), which has been listed on both Bursa Malaysia and Singapore Exchange since 2012, marking the first concurrent dual listing in Malaysia and Singapore.
Shares of Sunway Healthcare rose 17% on its debut from its initial public offering (IPO) price of RM1.45. The stock climbed more than 42% to RM2.07 before easing to RM1.85 at the time of writing on Wednesday, with 495.31 million shares traded. Post-listing Sunway, via SunCity, retained a substantial equity interest of 69.5% in Sunway Healthcare, while Greenwood Capital held a 7.5% stake.
At the current price of RM1.88, Sunway Healthcare commands a market capitalisation of about RM21.7 billion, translating to roughly 84 times earnings and 47 times EV/Ebitda, based on its FY2024 net profit of RM257.5 million.
Sunway Healthcare president Datuk Lau Beng Long said the group merits a premium valuation, backed by clear growth visibility, lower execution risk in its expansion, and a consistent track record of rapidly turning new hospitals profitable.
The group is expanding through a mix of brownfield and greenfield projects, aiming to nearly double its bed capacity to over 3,500 by 2032 from over 1,800 beds currently.
It operates a network of five private hospitals in Malaysia, anchored by its flagship quaternary facility in Sunway City, with three new hospitals planned in Seremban, Putrajaya and Iskandar Puteri.
“We have a strong track record of ramping up new hospitals quickly, typically achieving Ebitda and profit-before-tax within three to 13 months. For instance, our Kota Damansara hospital turned Ebitda-positive within nine months of opening and reached profit-before-tax within 13 months.
“We have a robust operating model and are confident we can replicate this performance as we expand, based on our track record across our existing hospitals. So all this adds value and certainty and confidence among investors [as to] why we deserve to be priced a bit higher,” he added.
Permodalan Nasional Bhd (PNB), one of the government-linked investment companies (GLICs), has recently said it will not accept Sunway’s voluntary takeover offer for its 13.3% stake in IJM, citing concerns over the valuation, the relatively small cash component, as well as IJM’s dividend prospects and long-term growth potential.
GLICs collectively hold about 45% in IJM, although none has a controlling stake.
Last Friday (March 13), independent adviser M&A Securities advised IJM shareholders to reject the offer, stating that it is “not fair and not reasonable” as Sunway’s RM3.15 offer represents a discount of up to 51% to its estimated valuation of IJM shares.
It added that the offer is unfair and unreasonable given IJM’s share liquidity, which allows shareholders to remain invested and participate in the company’s future growth without accepting the proposal.