Stake Sale At Robust Valuation Lays Path For Healthcare Arm’s Eventual IPO
Sunway announced the 16% stake sale of its healthcare division to GIC for RM750m cash, implying RM4.7b for its entire healthcare unit (31x EV/EBITDA). The conditions for the stake sale provide better clarity for SHG’s expansion visibility and IPO timeline. SHG could see earnings CAGR of 20-25% given its ongoing expansion. Maintain BUY with a higher target price of RM2.25 as we have factored in the higher valuation for SHG. We believe valuation could rise over time riding on SHG’s good growth prospects.