KUALA LUMPUR (June 15): Sunway Bhd's share price surged to a record high of RM4.01 after proposing a four-for-three bonus issue with free warrants, along with its plan to list its healthcare unit in five years.

At 10.47am, its share price rose 28 sen or 7.51% after paring gains, with 5.1 million shares transacted for a market capitalisation of RM7.6 billion. In a year, the share price grew 38.56%.

Yesterday, Sunway announced that it could potentially raise the maximum gross proceeds of RM965.44 million assuming full exercise of the warrants at an indicative exercise price of RM1.53 each.

The proposed bonus issue of shares will not raise any funds, while the amount of future proceeds from the proposed bonus issue of warrants would depend upon the exercise price and actual number of warrants exercised during its tenure.

Sunway aims to utilise the proceeds for future working capital including trade payments and other payables, staff costs and other operating expenses.

Analysts who were positive on Sunway's proposed corporate exercises maintained their "buy" call on the stock with higher target price.

AmInvestment Bank Bhd analyst Azman Hussin said in a note that the bonus issue and warrants are ways to reward shareholders while preserving cash in the company.

He also expects the marketability and trading liquidity of Sunway shares to be improved by the larger capital base and lower price per share.

Azman did not make any changes to the earnings forecasts for Sunway's financial years ending Dec 31, 2017 (FY17) to FY19.

"We maintain our 'buy' call with an unchanged sum-of-parts (SOP)-based fair value of RM3.81 per share, derived after applying a 20% discount to its property development division's revalued net asset valuation.

"(And) [pegged] its construction division at 14 times to calendar year 2018 price earnings (P/E), in line with our target P/E of 13 to 15 times for mid-sized construction stocks," he said.

MIDF Research analyst Jessica Low also maintained her earnings forecast for the group for FY17/FY18, and retained a "neutral" rating with revised target price of RM3.64.

"While we are positive on the proposed bonus issues, we opine that its impact has been mostly priced in as Sunway's share price gained 19% in the past three months. Hence, we maintain our 'neutral' recommendation," she added.

Hong Leong Investment Bank (HLIB) said Sunway should be rerated and compared to its closest peers, Gamuda Bhd and IJM Corp Bhd.

"Its active capital management will continue to reward shareholders with its deeply valued assets and growing healthcare business which are currently being ignored by most investors," said HLIB analyst Lee Meng Horng, who maintained a "buy" call on the stock.