KUALA LUMPUR: Sunway Group Bhd investors are likely to find solace in the recent news that the sale of Ramsay-Sime Darby Healthcare may favour either Columbia Asia or a consortium led by Affinity.
"This suggests that Sunway was not able to secure the bid. We believe that investors may in fact heave a sigh of relief following this development, given concerns about the deal such as overpayment on the transaction, gearing impact, and possible margin erosion.
"Notwithstanding this deal, investors should be reassured that its healthcare segment's growth remains intact given the group's strong expansion pipeline ahead," said Hong Leong Investment Bank Research (HLIB Research).
Actual outcome of the bid will be officially made known by next week, it said in a note today.
Following this news, HLIB Research reported that Sunway's share price rose on Thursday, closing at RM1.88 (up five sen from the previous day's close).
"We believe that investors may in fact heave a sigh of relief following this development, given concerns about the deal such as overpayment on the transaction, gearing impact, and possible margin erosion.
"As such, this development could be a blessing in disguise and spell a sigh of relief for investors," it said in a note.
It said that once the results of the bid are officially made known, likely next week, the transaction should uncover the latest market valuation of a healthcare business.
A premium valuation of the deal should help shed light on the value of the healthcare segment and may, in turn, lift the valuation of Sunway, it said.
Notwithstanding this deal, HLIB Research said investors should be reassured that its healthcare segment's growth remains intact given the group's strong expansion pipeline ahead.
Additionally, the firm believes an organic expansion should allow the group better control over its assets and seamlessly integrate its hospital assets into the group's wider ecosystem and hub-and-spoke model.
"We maintain our forecasts and buy calls with an unchanged target price of RM2.76.
"Sunway remains our sector top pick as the prospects of the group remain bright with its efforts to scale up businesses in healthcare, pharmacy, property development and investment, construction, building materials, and quarry," it added.