KUALA LUMPUR: HLIB Research issued Sunway Bhd a neutral call with an upward revision of the target price to RM5.01 (from RM3.73).
This follows the investing landscape here being awash with excitement on news of the company's proposed bonus issue announced yesterday, and HLIB Research picks up on this investor euphoria.
In its company insight report on Sunway, the research house said that the proposed bonus issue of four bonus shares for three existing shares and three bonus warrants for 10 existing shares improves liquidity and creates value to shareholders.
"The bonus warrant is estimated to yield at least 22 sen or 6 per cent based on current share price," the note said.
The leading research house also highlighted that, following Sunway's recent reclassification to trading and services - from property sector on Bursa Malaysia, investors must overcome their misperception of the company as a pure porperty counter.
The reclassification is timely as the Group is a huge conglomerate with a highly diversified income base from various business segments, the firm said, adding that its, "hidden healthcare gem could potentially be worth RM3.6 billion".
At yesterday's analysts' briefing, Sunway said that it is focusing to grow its healthcare business and is targeting five new medical centres to house a total 1,700 beds within the next five years.
"The healthcare segment could potentially be worth RM1.8 billion by FY18 (23 per cent of current market capitalization) and double to RM3.6 billion by 2021.
"Aside from the corporate exercise to reward shareholders and potential spin-off of healthcare segment as it grows bigger, the possible value unlocking exercise of its mature investment assets worth some RM1.4 billion cannot be ruled out," HLIB added in its report.
Additionally, looking further south in Johor, the research firm also noted that Sunway, which owns 1,770 acres via its Sunway Iskandar township (GDV: RM30 billion) in Johor, is set to reap the benefits from the KL-Singapore High Speed Rail (HSR) in the longer run given its close proximity to the Iskandar Puteri station in Johor.