Sunway’s shares rise post 1Q results, though analysts warn of looming cost pressures

KUALA LUMPUR (May 28): Sunway Bhd’s (KL:SUNWAY) shares climbed after its first-quarterly earnings booked a RM9.4 billion gain in net profit.

The company’s share price rose 3.8% to a high of RM5.44 during the day before paring gains, but still closing 1.15% higher at RM5.30. This gave the group a market value of RM36.1 billion, with about 8.98 million shares traded.

Analysts stayed cautious on the conglomerate despite the stronger first-quarter earnings, with research houses pointing to solid visibility from its property and construction divisions, while flagging rising cost pressures and near-term rerating catalysts.

For the first quarter ended March 31, 2026 (1QFY2026), Sunway gained RM9.1 billion in fair value from the listing of Sunway Healthcare Holdings Bhd (KL:SUNMED) while quarterly revenue rose by 8% to RM2.56 billion.

Bloomberg data showed 13 research houses on Sunway’s stock with four 'buy' calls and nine 'neutral' ratings, signalling a more cautious consensus on the counter. The 12-month average target price was RM5.61.

CIMB Investment Bank (CIMB IB) said Sunway’s outlook continued to be supported by property sales and a sizeable construction order book, particularly from data centre-related jobs, according to a research note.

The research house noted that Sunway Construction secured RM3.6 billion worth of new jobs in 1Q, representing 60% of its RM6 billion replenishment target for the financial year.

Outstanding construction order book stood at RM8.2 billion, with about 64% linked to data centre projects, backed by a RM15.3 billion tender book, it said.

However, the research house trimmed its target price (TP) to RM5.35 and kept its 'hold' call on the counter.

“Our earnings downgrades reflect rising diesel and input costs, which could become more evident from 2H2026 onwards,” said CIMB IB. 

In a separate note, TA Securities said demand for well-located and transit-oriented developments remained intact. The research house pointed to strong take-up for Singapore project Pinery Residences, alongside upcoming launches such as the Bukit Chagar RTS transit-oriented development project in Johor.

The research house, who maintained its 'hold' call, said Sunway’s management expects margins to remain stable this year due to ongoing project execution while data centre projects move beyond peak progress stages.

Risks remain, however, as TA Securities said its newly opened assets such as Sunway Square Mall and office towers may continue to incur gestation losses in the near term, due to marketing expenses and tenant rent-free periods.

MBSB Research, in another research note, said that Sunway’s net gearing improved to 0.32 times in 1QFY2026 from 0.48 times in the preceding quarter following the listing of Sunway Healthcare, which enlarged the group’s equity base. It kept its “neutral” recommendation on the counter with a higher TP of RM5.26 from RM5.20 previously.

“We see stable long-term prospect for Sunway Bhd, driven by growth of [its] property development division and healthcare division,” said MBSB.

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