Tuesday, Mar 12, 2024
MARC Ratings has assigned a preliminary rating of AAIS(cg) to Sunway Healthcare Treasury Sdn Bhd’s (SH Treasury) existing unrated Islamic Medium-Term Notes (IMTN) Programme of up to RM5.0 billion with a stable outlook. The rating reflects the credit strength of parent Sunway Healthcare Holdings Sdn Bhd (SHH), on account of the unconditional and irrevocable guarantee it provided to investors. SH Treasury is a wholly-owned special purpose vehicle of SHH.
The rating mainly considers two key factors, namely SHH’s strengthening business profile as reflected by its growing presence in the domestic private healthcare sector since its establishment 25 years ago as well as its sound financial performance, characterised by strong EBITDA margins and low financial leverage.
SHH has expanded its operations to three hospitals from its first Sunway Medical Centre in Bandar Sunway in November 1999 and is expected to add two hospitals by end-2025. Accordingly, in terms of capacity, the number of licensed beds will increase from 1,148 currently to over 2,200. In terms of bed count, SHH currently accounts for 7% of the market share, and this is expected to grow to around 14%. MARC Ratings views SHH’s strong brand equity and the location of its hospitals in strategic areas within the Klang Valley and major cities have contributed to its growing status in the industry.
Group revenue stood at RM1.5 billion for 2023, up 37% y-o-y while its above-peer EBITDA margin was maintained at 26%. The solid top-line performance saw SHH posting stronger cash flow from operations of RM356 million compared to RM189 million in 2022. The strong growth was in tandem with the growth of its hospitals and its focus on tertiary care.
Total debt increased to RM698 million as at end-2023 from RM32.9 million a year earlier to fund capex expansion related to the opening of new hospitals and the acquisition of Tower A and B of Sunway Medical Centre from Sunway Real Estate Investment Trust. The increase notwithstanding, leverage remained low with a debt-to-equity ratio of 0.26x; this is expected to increase to 0.40x by end-2025 on the back of projected debt of RM1.1 billion. Overall, MARC Ratings believes the group’s strong cash-generative operations would remain supportive of SHH’s balance sheet strength.
Contacts:
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my
Hafiza Abdul Rashid, +603-2717 2955/ hafiza@marc.com.my