KUALA LUMPUR (June 24): Sunway Bhd, which resumed trading today, opened at RM1.81, three sen higher against its last traded price of RM1.78 after the company announced yesterday that Singapore government-owned Greenwood Capital Pte Ltd is investing RM750 million in Sunway Healthcare Holdings Sdn Bhd for a 16% stake in Sunway Healthcare.
However, the stock drifted lower shortly after the opening bell.
As at 10.15am, Sunway Bhd's share price was five sen or 2.8% lower at RM1.73, with 6.064 million shares traded.
At RM1.73, Sunway Bhd had a market value of about RM8.53 billion based on the company’s 4.93 billion issued shares.
Sunway Bhd’s share trade resumed today following a suspension yesterday in conjunction with the announcement of Greenwood’s planned investment in Sunway Healthcare.
The stock was on an upward trend since late last month, climbing from RM1.55 level.
Sunway Bhd said in a Bursa filing that Sunway Bhd, Sunway City Sdn Bhd, Sunway Healthcare and Greenwood yesterday signed a share subscription agreement for the subscription of 100 million shares, 10 million irredeemable convertible preference shares (ICPS) and one cumulative irredeemable dividend convertible preference share (DCPS) in Sunway Healthcare by Greenwood for RMM750 million in cash.
"In connection with the proposed investment, a shareholders agreement will be entered into among Sunway Bhd, Sunway City, Sunway Healthcare and Greenwood upon completion of the issuance and subscription of the subscription shares in order to set out the terms governing the relationship among them, including the basis on which Sunway Healthcare as well as its existing and proposed subsidiaries shall be operated, managed and administered.
"The proposed investment entails the issuance by Sunway Healthcare and subscription by Greenwood of 100 million Sunway Healthcare shares representing an 8.24% equity interest in Sunway Healthcare, 10 million ICPS which can be converted upon election by Greenwood into 94.23 million Sunway Healthcare shares representing a 7.76% equity interest in Sunway Healthcare and one DCPS which can be converted into one Sunway Healthcare share, which will collectively give Greenwood a 16% equity interest in Sunway Healthcare on a fully converted basis in exchange for a RM750 million investment, implying an equity value of RM4.69 billion,” Sunway Bhd said.
Today, Kenanga Investment Bank Bhd analyst Lum Joe Shen wrote in a note that Kenanga is positive on Greenwood’s proposed investment in Sunway Healthcare as the equity value fetched by the deal is 22% higher than what Kenanga had ascribed.
Lum said this is a strong testament to Sunway Healthcare’s deep value.
"Furthermore, the deal also provides investors a clear monetisation timeline via a targeted IPO (initial public offering). Consequently, we upgrade [Sunway Bhd's] target price (TP) to RM1.95 (from RM1.77) and maintain 'MP' (our 'market perform' call)."
TA Securities Holdings Bhd analyst Thiam Chiann Wen wrote in a note today that TA believes a partial stake sale in Sunway Healthcare is not new to the market as the management has been guiding that strategic divestment is on the cards.
"However, we are surprised by the hefty premium that Sunway Healthcare is able to fetch,” Thiam said.
This suggests the Singapore government's confidence in Sunway’s ability to grow its healthcare division and the long-term potential of Malaysia’s healthcare industry, according to Thiam.
The analyst said TA is maintaining its "buy" call on Sunway Bhd shares, with a higher TP of RM2.23.