KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) has maintained its "Buy" call on Sunway Bhd, but lowered its target price to RM5.54 following the lapse of its conditional takeover offer for IJM Corp Bhd.
HLIB said the outcome was largely anticipated, given earlier indications that key institutional shareholders were unlikely to support the deal.
With the takeover now behind it, the research house expects investor focus to shift back to Sunway's core fundamentals, which remain resilient.
It said Sunway's healthcare arm, Sunway Healthcare Holdings Bhd, has performed strongly since its listing on March 18, with its share price rising to RM1.90, up 31 per cent from its initial public offering price of RM1.45.
Despite this, Sunway's own share price remains relatively modest, suggesting that the embedded value of its healthcare business has yet to be fully reflected.
"With the removal of the takeover overhang, we see scope for a re-rating as the market begins to better recognise this value," it said.
HLIB also highlighted continued momentum in Sunway's property segment, noting that its joint venture project in Singapore, Pinery Residences, achieved a 92.5 per cent take-up rate on its launch day.
This is expected to contribute about RM1.3 billion in sales for the first quarter of 2026, putting the group on track to meet its full-year sales target of RM4.2 billion.
The group is also expanding its industrial footprint through its partnership with Equalbase, having recently launched the 103° industrial park within Sunway City Iskandar Puteri and already secured tenants for its first two warehouses.
HLIB has revised its earnings forecasts following the Sunway Healthcare listing, lowering its projections by 5.7 per cent for financial year 2026 (FY26) and 4.1 per cent for FY27.
"Despite this dilution, we continue to project strong earnings growth of 15.2 per cent year-on-year for FY26, supported by stronger property contributions and healthcare growth as newly opened hospitals ramp up towards profitability," it said.
The research house lowered its target price from RM6.12, factoring in the dilution of Sunway's stake in Sunway Healthcare and incorporating a target price of RM1.63 for the unit.