SUNWAY: Earnings Exceed Expectations, Analyst Upgrades Rating and Target Price

A recent investment bank research report indicates a strong financial performance for a prominent diversified conglomerate, with its nine-month 2025 (9M25) core net profit largely meeting market expectations. The positive momentum, supported by robust contributions from key segments and an upward revision in future forecasts, has led to an upgraded investment rating and an increased target price.

Performance Review

The conglomerate recorded a 9M25 core net profit of RM720.1 million, aligning closely with analyst and street full-year forecasts. While year-on-year core net profit saw a slight dip of 0.4% despite a 49% rise in revenue, this was primarily due to slower property development earnings and initial start-up costs in its healthcare division. Property development earnings faced headwinds from slower billings and the absence of a significant profit contribution from a Singapore Executive Condominium project in the prior year. Similarly, healthcare segment profit declined by 20% year-on-year due to pre-opening expenses at new facilities.

However, these challenges were significantly cushioned by stellar performances in other divisions. The construction segment posted a remarkable 125% year-on-year jump in PBT, fueled by accelerated progress on data centre projects. Property investment also saw a healthy 28% year-on-year increase, driven by higher income and stronger contributions from its REIT.

Quarter-on-quarter, the financial picture brightened considerably, with core net profit rising 22% to RM283.1 million, despite flat revenue. This growth was attributed to stronger contributions across most segments and improved operational efficiency in healthcare, which recorded a 45% QoQ increase in PBT. Property sales surged impressively in 3Q25, increasing 213% year-on-year and 144% quarter-on-quarter to RM1.8 billion, pushing 9M25 sales to RM3.1 billion, a 68% year-on-year increase. A new Singapore executive condominium project, Otto Place, was a major contributor, achieving a 94% take-up rate and accounting for 60% of total sales during the period.

Future Outlook and Recommendation

Analysts anticipate a stronger fourth quarter, buoyed by higher progress billings and sustained momentum in the property investment and healthcare sectors. The group is well-positioned to exceed its current year’s new sales target of RM3.6 billion, having already achieved 86% of this goal by 9M25.

The construction segment remains robust, benefiting from Malaysia’s digital and infrastructure drive, with RM3.9 billion in new orders year-to-date and strong earnings visibility extending 3-4 years, backed by RM5.2 billion in unbilled sales and RM3.2 billion in outstanding construction order book. The healthcare division continues its expansion, with a planned IPO in 1Q26 identified as a key value-unlocking catalyst.

Reflecting this optimistic outlook and strong performance, the investment bank has revised its full-year 2025 sales assumption upwards. Consequently, earnings forecasts for FY25, FY26, and FY27 have been adjusted higher by 1.9%, 10.3%, and 3.3% respectively. This positive reassessment underscores the group’s solid trajectory and justifies the analyst’s upgraded rating and increased target price.