EPF insurance plan forecast to boost Sunway healthcare showing

KUALA LUMPUR: Sunway Bhd could see an increase in patient numbers at its hospitals should the government proceed with the proposed Employees Provident Fund (EPF)-funded health insurance scheme, according to MIDF Research.

In a recent report, the research house said the initiative, which allows EPF members to voluntarily use savings from Account 2 for insurance coverage, is expected to expand access to faster and higher-quality private healthcare, benefitting 16 million EPF members.

MIDF Research said the proposed scheme will “benefit Sunway Healthcare Group (SHG) of Sunway, which owns five operating hospitals in Malaysia, as it will increase the number of outpatients as well as the number of admissions following better access of people to private healthcare services”.

“The positive impact from the EPF health insurance scheme should cushion the expected mild negative impact from the rollout of the diagnosis-related group payment scheme, which is reported to include both public and private hospitals to contain medical inflation,” it added.

The Diagnosis-Related Group scheme is a payment model that standardises hospital charges by grouping treatments into fixed-rate categories based on diagnosis and procedures, aimed at controlling medical costs.

MIDF Research said Sunway’s healthcare segment remains a key earnings contributor, accounting for 14% of the group’s profit before tax (PBT) in the financial year ended Dec 31, 2024 (FY24).

However, it said the contribution dropped to 10% in the first quarter ended March 31, 2025 “as PBT of the healthcare segment was halved due to start-up operational losses from Sunway Medical Centre (SMC) Damansara and pre-commencement costs from SMC Ipoh”.

The research house noted that SHG currently had 1,647 licensed beds, and the group aims to increase its total bed capacity to 3,000 by 2030 through new hospital developments.

“Note that SHG signed an agreement with Putrajaya Holdings Sdn Bhd in April 2025 for the development of a 325-bed hospital in Putrajaya.

“SHG is mulling its first hospital in Seremban as it is embarking on a transit-orientated development project in Seremban,” it said.

“Overall, the expansion plan will further drive earnings growth of SHG.

“Besides, earnings growth of SHG will also be driven by medical tourism in Malaysia due to the strong reputation of SHG.”

On the broader group outlook, MIDF Research said Sunway’s earnings in FY24 were strong at RM1.06bil, up 51.3% year-on-year, driven by “lumpy earnings contribution from projects in Singapore”.

However, the research house expects earnings to normalise in FY25.

“We see that earnings in FY25 will mainly be supported by growth in property investment and construction division.”

MIDF Research has maintained a “neutral” rating on Sunway, with an unchanged target price of RM4.86 a share.