Sunway Healthcare extends gain by nearly 8% as investors buy into growth optimism
KUALA LUMPUR (March 27): Sunway Healthcare Holdings Bhd (KL:SUNMED) rose again on Friday as investors bought into growth optimism of one of the country’s largest hospital operators.
Shares of Sunway Healthcare rose as much as 19 sen or over 8% to RM2.46, and set for consecutive days of gains since listing five days ago. The stock paused for the midday trading break at RM2.40, valuing it at RM28 billion. Trading volume was also high with nearly 80 million shares changed hands.
“It’s the institutional investors that are buying the stock,” said an institutional dealer with a local investment bank. “Both active and passive funds are coming into the stock…one, for benchmarking, and two, it’s in a defensive sector.”
Hospital operators are considered defensive because demand for medical services remains stable regardless of economic conditions, providing shelter during volatile markets with the geopolitical conflict in the Middle East now in its fourth week.
The gain also comes on the heels of Thursday's remarks by founder and chairman Tan Sri Dr Jeffrey Cheah on the newly listed entity's ability to deliver on its targets. The price surge has pushed the stock’s valuations to more than 100 times the trailing earnings.
Noting that the elevated valuation is a reflection of strong investor optimism, Cheah stressed that Sunway Healthcare remains focused on its fundamentals — including cost-efficient expansion, clinical quality and talent development central to sustaining its long-term growth.
Passive funds, such as index funds, buy certain stocks to replicate the performance of market benchmarks.
Sunway Healthcare has added 66% to its initial public offering price of RM1.45 per share. The company has added more than RM11 billion to its market value and is now the 17th largest capitalised company on Bursa Malaysia.
The stock also officially joined Malaysia’s main equity benchmark FBM KLCI on Wednesday.
Since then, the rally has taken Sunway Healthcare far beyond target prices of even the most optimistic research houses. Nomura values the stock at RM1.80, Hong Leong Investment Bank recommends RM1.63, and Macquarie has the stock at RM1.25.
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