KUALA LUMPUR (April 22): AmInvestment, in its coverage of Sunway Healthcare Holdings Bhd (KL:SUNMED), said the private healthcare group deserves a higher valuation than its peers due to its steady organic growth and consistent performance.

In its initiation note on Wednesday, it said current peer valuations understate investors’ true willingness to pay for growth as many are in transition phases, like strategy or leadership reset.

In contrast, Sunway Healthcare has clear, steady organic growth and consistent execution.

Instead of using current peer valuations, AmInvestment compares Sunway Healthcare to peers’ past peak valuations of 17-43 times enterprise value (EV)/earnings before interest tax depreciation and amortisation (ebitda), seen when confidence in growth was highest. These peaks matched companies with three-year average ebitda growth of 8%–63% and margins of 11%–30%.

Based on Sunway Healthcare’s expected ebitda growth of 24% and margins of 27%, a fair valuation is about 30 times forward EV/ebitda. It has a RM2.22 target price for the stock.

AmInvestment said Sunway Healthcare can command higher valuations because it is seen as a quality growth company. This was also seen in past market rallies, like the 2025 AI/data-centre boom and the 2020–21 tech cycle.

Although Sunway Healthcare has a reported public free float of 23%, the actual tradable shares are much lower at about 8%–9% after excluding long-term, locked-in investors.

AmInvestment said because only a small number of shares are actively available for trading, any new demand has to compete for limited supply. This tight liquidity in Malaysia often leads to higher stock prices for companies with strong growth prospects.

It said demand for healthcare remains strong, as Sunway Healthcare’s hospital areas have only six to 24 beds per 10,000 people, well below The Organisation for Economic Co-operation and Development (OECD) average of 43, showing a shortage of hospital capacity. Its specialised services also face limited competition, helping maintain pricing and usage. Estimated revenue per bed is around RM1.6 million to RM1.9 million annually.

This supports its FY2025-FY2028 ebitda compounded annual growth rate of 24% year-on-year for the group.

Core net profit at the multi-tertiary hospital operator is projected to grow by nearly 16% in financial year 2026 (FY2026) to RM280.3 million, before accelerating to RM379.8 million in FY2027, as new facilities reach operational maturity, the research house said.

“Earnings are anticipated to pick up stronger thereafter, driven by operational leverage from rising occupancy, case-mix shift towards higher-yield specialties... and rising contribution from medical tourism,” AmInvestment added.