• BUY, new MYR5.75 TP from MYR5.00, 16% upside with c.1% FY24F yield. Sunway’s 3Q24 results are in line. 3Q earnings were largely driven by the completion of Parc Central Residences in Singapore, with MYR124m in accumulated development profit recognised. As its 9M24 property sales totalled MYR1.85bn, Sunway is on track to meet its full-year target of MYR2.6bn. We raise our TP, as Sunway Healthcare Group (SHG) may be worth more – in view of the recent re-rating of listed healthcare stocks – supported by strong earnings. We now value SHG at 26x EV/EBITDA.

• 3Q24 results. Despite the flattish QoQ growth in EBIT for the property development segment, the property investment, construction, trading and quarry divisions all registered 15-33% sequential growth during the quarter. The completion of Parc Central Residences in Singapore further lifted JV income in 3Q24. Meanwhile, the healthcare segment also reported higher revenue and EBIT growth of 9% and 27% QoQ, driven by higher licensed bed capacity from Sunway Medical Centre (SMC) Penang and higher demand for medical treatment from all existing hospitals. In the pipeline, SMC Damansara and SMC Ipoh are slated to be opened in Dec 2024 and 1Q25, bringing total bed capacity to about 2,500 beds from 1,240 beds presently.

• Decent sales in 3Q24. New property sales amounted to MYR579m vs MYR773m in 2Q24. 9M24 sales of MYR1.85bn was mainly contributed by projects in Singapore (MYR364m), Velocity 3 (MYR291m), Aviana (MYR233m), Jernih Residence (MRY201m) and Flora (MYR189m). In Singapore, while the take-up rate for Terra Hills remained stagnant at 42%, sales at The Continuum improved to 57% from 42% in 2Q24. Sales for projects in Malaysia also improved. Sunway Alishan is now 78% sold (from 66% in 2Q24), while Sunway Flora in Bukit Jalil Tower B is 57% sold (from 46% in 2Q24). Velocity 3 Tower B (GDV: MYR373m), launched in May 2024, achieved a take-up rate of 58% (from 46% in 2Q24). Projects in Sunway Iskandar continued to be in demand. Sunway Maple, launched in Sep 2024, is 73% sold. The project comprises 156 units of 2-storey terrace homes and has a GDV of MYR182m. Novo Place (first Tengah Plantation land) was well- received, with 57% of sales clocked recently, on the day of its launch. In the pipeline: Sunway Bayu in Ipoh (GDV: MYR106m) and Sunway Wellesley townhouse in Penang (GDV: MYR129m), will be launched in Dec 2024.

• Forecast. We increase FY24-26F earnings by 3%, 4% and 4%. Sunway’s unbilled sales and outstanding construction orderbook stood at MYR4.5bn and MYR7.07bn in 3Q24, compared with MYR4.5bn and MYR7.4bn in 2Q24.

• Higher TP. Our TP includes a 8% ESG premium applied to Sunway’s intrinsic value, as its ESG score of 3.4 is four notches above the country median.

Source: RHB Securities Research - 27 Nov 2024