Analysts have given mixed but generally favourable views on Sunway Bhd, with both MIDF Amanah Investment Bank Bhd maintaining a NEUTRAL rating, with a revised target price (TP) of RM4.92, up from RM4.24, while RHB Investment Bank Bhd (RHB Research) kept a BUY rating with a new TP of RM5.75, offering a potential upside of 16%.
MIDF Research highlighted that Sunway's 9MFY24 earnings exceeded expectations, primarily driven by a stronger-than-anticipated performance from the property development division. Core net income for the period came in at RM734.5 million, representing 91% and 88% of MIDF Research's and consensus' estimates, respectively.
The positive deviation was attributed to the lumpy earnings recognition from the Parc Central Residences project in Singapore, completed in July 2024. This recognition boosted profit before tax from the property development division by 164% quarter-on-quarter (QoQ). The healthcare division also saw a solid performance, with a 27.8% QoQ increase in earnings.
RHB Research also pointed to the completion of Parc Central Residences as a key driver for Sunway's 3Q24 earnings, with RM124 million in accumulated development profit recognised. The research house also noted that Sunway's healthcare segment showed strong growth, with a 9% increase in revenue and a 27% growth in earnings before interest and tax on a QoQ basis. The firm raised its TP to RM5.75 from RM5, citing stronger potential from Sunway Healthcare Group, particularly after the re-rating of listed healthcare stocks.
On property sales, both analysts noted that Sunway is on track to meet its full-year target. MIDF Research reported that Sunway achieved RM1.85 billion in new property sales for 9MFY24, surpassing 70% of its RM2.6 billion sales target. RHB Research similarly observed that Sunway's sales momentum remained strong, with several projects, including Sunway Maple and Novo Place, performing well in terms of sales take-up rates. Sunway's property sales were also bolstered by strong demand for developments in Singapore and Malaysia.
Despite the positive earnings, both analysts raised concerns about the limited upside in the short term. However, looking ahead, both research houses remained optimistic about Sunway's long-term prospects, underpinned by its robust sales pipeline and continued expansion in the healthcare sector.
