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Given the improving liquidity for its stock, Sunway Bhd is expected to be re-included to the FTSE4Good Bursa Malaysia Index and the FTSE4Good Bursa Malaysia Shariah Index, with the earliest possible inclusion being December 2023.

According to Hong Leong Investment Bank (HLIB) Research, the inclusion will help enhance the stock’s “investability” especially for foreign investors and environmental, social and governance index tracking as well as thematic funds.

HLIB Research noted that moving forward, the group’s Iskandar Puteri township development, as well as its healthcare segment, will be the main pillars anchoring growth for the group in the next few years.

For Sunway’s healthcare segment, HLIB Research said the strong improvement within the segment is an indication of growth and the potential of its healthcare business.

“The group remains steadfast in expanding its hospital capacity and assets over the next several years, which should anchor further growth in the segment,” said the research house.

Sunway is also optimistic that it can achieve an earnings before interest, taxes, depreciation and amortisation compounded annual growth rate of less than 20% from 2023 until 2027.

HLIB Research said investors should be reassured that Sunway’s priority remains to unlock shareholder value through the inclusion.

The exercise could potentially unlock better value if it were to take place closer to the group’s target in 2027, as this will allow its newer hospital assets to mature and demonstrate an earnings track record.

HLIB Research said this is given that several of the group’s new hospital assets will come on stream in the next several years.

“The group does not discount the possibility of an earlier inclusion should the opportunity arise. For example, if the equity market conditions are favourable,” the research house said.

HLIB Research said the group sees great development potential for its Sunway City Iskandar Puteri township, particularly the rapid transit system (RTS) which is on track to be completed by the end of 2026.

The RTS is expected to significantly improve the connectivity between Johor and Singapore, as well as shortening the commuting time between the two countries.

Additionally, HLIB Research said the potential revival of high-speed rail and the proposed establishment of the Johor-Singapore Special Economic Zone and Special Financial Hub augurs well for economic growth in the region.

“Both the improved connectivity as well as the creation of high-skilled employment and investment opportunities should be supportive of the demand for the group’s Iskandar Puteri township,” said the research house.

Sunway’s 1,800-acre township in Iskandar Puteri comprises 700 acres in Medini and the remaining 1,100 acres in Pendas. The group increased its ownership stake in the Pendas development from 60% to 100% in August 2023.

Source: TheStar​