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- CIMB Securities said the transaction is positive for Sunway, highlighting diversification into infrastructure assets such as toll roads and ports, and operational synergies across property and construction.
KUALA LUMPUR (Jan 13): Analysts are generally positive on Sunway Bhd’s (KL:SUNWAY) RM11 billion takeover of IJM Corporation Bhd (KL:IJM), citing earnings growth and diversification into infrastructure, though some question the offer price.
CGS International in a note said the deal could boost Sunway’s credibility and narrow its holding company discount after Sunway Healthcare Group Bhd’s expected listing in the first quarter of 2026.
It estimated, on a pro forma basis, the combined entity would have total assets of RM53 billion, up 69% from Sunway’s current level, and shareholders’ funds of RM26 billion, a 64% increase.
Total net debt would be RM13 billion, with a net gearing of 0.5 times. Its Malaysian order book would reach RM14.8 billion (+131%), the land bank would expand to 5,685 acres (+140%), and the gross development value would total RM118 billion (+99%).
Hong Leong Investment Bank Research (HLIB) meanwhile expects the acquisition to lift Sunway’s earnings per share by 17.8% on a pro forma basis for the financial year ending Dec 31, 2026 (FY2026), excluding synergies, supported by Sunway’s higher valuation multiple and IJM’s sizeable construction and infrastructure assets.
In a separate note, CIMB Securities said the transaction is positive for Sunway, highlighting diversification into infrastructure assets such as toll roads and ports, and operational synergies across property and construction. It said it sees the deal only being marginally earnings-accretive for Sunway under both minimum and full acceptance scenarios.
However, it noted that the RM3.15 offer price represents a 12.5% discount to its target price of RM3.60 for IJM.
Meanwhile, MBSB Research said the acquisition would modestly improve earnings by about 1% post-consolidation while lowering net gearing to around 0.5 times due to the enlarged equity base.
RHB Investment Bank highlighted that the enlarged group would gain scale, deeper infrastructure exposure, and stronger execution, making Sunway a more diversified play on domestic growth over the medium to long term.
It added that Sunway will have one less major rival in the construction industry, positioning its subsidiary Sunway Construction Group Bhd (KL:SUNCON) to be in a stronger position when bidding for new jobs.
In contrast, Kenanga Research said the RM3.15-per-share offer could be a hurdle, as IJM shareholders may be inclined to reject it. The price is 7% below its target price for IJM of RM3.40 and may not fully reflect the value of its infrastructure assets and earnings potential.
The research house added that the limited cash component and high Sunway share issuance may not entice IJM shareholders to accept the offer.
HLIB and RHB maintained their 'buy' calls on Sunway, while MBSB and CIMB kept their 'hold' ratings. Kenanga maintained its 'underperform' call on the stock.
There are now three ‘buy’, nine ‘hold’ and one ‘underperform’ calls on the counter, according to Bloomberg. The average 12-month target price is RM5.71 a share.
Read also:
IJM hits four-month high on acquisition by Sunway
Sunway to acquire IJM Corp in RM11 bil cash-and-share deal
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