HLIB Research maintains a BUY rating with TP of RM1.95 (10% discount to a SOPderived value of RM2.17), supported by undemanding 11x FY21E P/E, attractive 5.1% FY21E DY coupled with strong FY20-22 EPS CAGR of 31%, premised on its unbilled sales of RM2.5bn (4.6x cover ratio) and a robust outstanding order book of RM5.6bn (3.2x cover ratio). Moreover, the value of the healthcare business (with new hospitals and the Sunway Medical expansion coming on stream over the next three years) has yet to be appreciated as it is embedded within the parent-co. Financially, the just concluded RM1.1bn proceeds from ICPS and the proceeds raised from future divestment of stake in healthcare in the later years will further strengthen its balance sheet to pursue business expansion and scale new heights.

Bullish double bottom formation. A double bottom is formed following two consecutive rounding bottoms. A bullish reversal is established when share prices stage a breakout above the neckline resistance. After the twin bottoms on 12 Aug (RM1.23) and 12 Nov (RM1.22), Sunway’s share prices has gradually rebounded to close above key multiple SMAs and reclaimed above the crucial RM1.39 neckline yesterday, supported by active volume of 4.5m shares (vs 90D average 3.3m). Following the bullish double bottom pattern, the stock is expected to march higher towards RM1.50 (50% FR) and RM1.56 (38.2% FR) levels before reaching our LT objective at RM1.66 (23.6% FR). Supports are pegged at RM1.34 (76.4% FR) and RM1.31 (100D SMA). Cut loss at RM1.30.

Source: Hong Leong Investment Bank Research - 1 Dec 2020