KUALA LUMPUR: Sunway Medical Centre Sunway City (SMCKL), the largest private hospital in Southeast Asia, is poised to emerge as a leading regional hub for medical tourism, Hong Leong Investment Bank Bhd (HLIB Research) said.
HLIB Research said that by expanding its international patient base, the hospital could achieve a notable increase in revenue per bed over the next few years, reflecting strong potential for pricing growth.
The research firm also noted that the hospital currently operates 724 beds and plans to expand to 1,086 beds, surpassing other major regional hospitals such as Bumrungrad in Thailand, which has 580 beds.
It said that Bumrungrad's strong appeal to international patients, who form 67 per cent of its clientele, drives a revenue per bed of RM5.7 million, which is more than four times higher than Sunway Healthcare Group's average of RM1.3 million per bed, highlighting the revenue potential from international patients.
"With top-tier doctors, advanced equipment, and a strategic location in Sunway City offering access to accommodation, leisure, and shopping, SMCKL is well-positioned to become a leading medical tourism hub.
"Over the next few years, SMCKL has the potential to significantly grow its international patient base, bringing its revenue per bed closer to Bumrungrad's levels.
"This underscores the considerable upside for SMCKL, driven not only by capacity expansion but more importantly by enhanced pricing power similar to Bumrungrad," it said in a research note.
Given that recent private healthcare transactions are valued in the 20 to 25 times of enterprise value (EV) to earnings before interest, taxes, depreciation and amortisation (EBITDA) range, HLIB Research said it would be strategically prudent for Sunway and Singapore's sovereign wealth fund GIC Pte Ltd to only consider a listing that matches or exceeds this valuation.
"Both Sunway and GIC could realise higher value through private sales if the initial public offering (IPO) valuation does not meet this threshold, suggesting a floor valuation of at least 20 times EV/EBITDA and the potential to reach above 25 times," it added.
HLIB Research also said that Sunway's property segment is set to exceed FY24 launch target with earnings accelerating in the second half (2H) of this year driven by Sunway V3 and Singapore projects.
"Property development earnings in 2H 2024 are projected to be strong, led by EC Parc Central Tampines (RM120-130 million in the third quarter of 2024) and more meaningful contributions from The Continuum, Terra Hills, and the highly earnings-accretive Sunway V3," it said.
The firm increased Sunway's earnings forecat for FY23/24/25 by 10.3 per cent, 15.8 per cent and 1.1 per cent to account for higher property contribution.
It maintained "Buy" call on the company with a higher target price of RM5.45 a share from RM5.15 previously.