Sunway Bhd is poised to benefit from increased patient traffic at its hospitals if the Malaysian government proceeds with the proposed Employees Provident Fund (EPF)-funded health insurance scheme, according to a report by MIDF Research.
The research house noted that the scheme, which would allow EPF members to voluntarily utilise funds from Account 2 for health insurance, is anticipated to widen access to faster and higher-quality private healthcare services. The initiative stands to impact approximately 16 million EPF members.
MIDF Research stated that the scheme would benefit Sunway Healthcare Group (SHG), a subsidiary of Sunway Bhd, which currently operates five hospitals across Malaysia. The initiative is expected to drive an increase in outpatient numbers and hospital admissions by improving accessibility to private healthcare services.
The report added that the potential gains from this scheme are likely to offset the projected mild downside from the introduction of the Diagnosis-Related Group (DRG) payment model. This new system, which affects both public and private hospitals, categorises treatments into standardised fixed-rate bands to control medical cost inflation.
Sunway’s healthcare division has been a significant contributor to group earnings, accounting for 14% of its profit before tax (PBT) for the financial year ended 31 December 2024. However, this contribution declined to 10% in the first quarter ended 31 March 2025 due to start-up losses from Sunway Medical Centre (SMC) Damansara and pre-operational expenses at SMC Ipoh.
As of now, SHG operates with 1,647 licensed beds and is targeting an expansion to 3,000 beds by 2030 through the development of new facilities. In April 2025, SHG entered into an agreement with Putrajaya Holdings Sdn Bhd to develop a 325-bed hospital in Putrajaya. The group is also exploring the establishment of its first hospital in Seremban as part of a transit-oriented development in the area.
MIDF Research views SHG’s expansion strategy as a driver of future earnings growth, alongside increasing contributions from Malaysia’s medical tourism sector, bolstered by the group’s strong industry reputation.
On the broader corporate outlook, Sunway Bhd posted a robust performance in FY2024, recording a 51.3% year-on-year increase in earnings to RM1.06 billion, driven by substantial contributions from projects in Singapore. However, the research house anticipates normalised earnings in FY2025, primarily supported by the property investment and construction divisions.
MIDF Research has maintained a “neutral” recommendation on Sunway Bhd, with an unchanged target price of RM4.86 per share.
-The Star
