[MARC] MARC Ratings affirms ratings on Sunway Group’s issuances

MARC Ratings has affirmed its ratings on Sunway Group’s issuances as follows:

The outlook on all ratings is stable.

Sunway’s strong operating track record and established market position in the property and construction sectors remain key rating strengths. While cash flow metrics have improved, rising borrowings and execution risks arising from the expansion of its business activities, particularly across the group’s international property development and domestic healthcare sectors, continue to weigh on its credit profile.

With the progressive completion of several domestic and international projects, Sunway launched new developments with a combined gross development value (GDV) of RM2.7 billion in 2024, followed by an additional RM358.0 million as at end-May 2025. The overall lower take-up rate of 69.9% as at end-1Q2025 (2024: 73.4%) was mainly attributed to the relatively nascent stage of the recently launched projects. As at end-1Q2025, Sunway’s RM9.0 billion ongoing property projects had generated about RM4.0 billion in unbilled sales, providing earnings visibility over the next three years. Currently, the group has domestic property development projects of RM4.7 billion, with overseas projects in Singapore (RM4.0 billion) and China (RM372.0 million). It plans to launch other projects with a combined GDV of RM4.1 billion in 2025, focusing on its core Klang Valley market, the upcoming Johor market and the persistently strong demand for executive condominiums in Singapore.

Meanwhile, the outstanding external construction order book stood at RM3.9 billion. A substantial portion amounting to RM1.7 billion is attributed to the JHB1X0 data centre project in Johor, with completion expected by early 2026. After securing a record RM3.4 billion in new external jobs in 2024, the group secured an additional RM713.0 million in 1Q2025.

As at end-1Q2025, Sunway’s property investment division — comprising retail malls, offices, industrial buildings, university residences, and hotels — maintained a strong performance with high occupancy levels. Its malls have maintained tenancy levels largely above 90.0%, reflecting sustained rental demand in the retail market. Theme parks attracted 430,000 visitors in 1Q2025 (1Q2024: 515,000), while hotels saw improved occupancy levels and room rates. Share of profit from the healthcare division declined mildly to RM31.8 million from RM36.8 million a year prior due to start-up losses from two new hospitals; however, recovery is anticipated with growing demand. The planned listing of this division on Bursa Malaysia could unlock further value.

During 1Q2025, group revenue surged by 66.8% to RM2.4 billion, with pre-tax profit rising to RM304.1 million from RM226.7 million a year earlier, driven by strong performances across most segments. Total borrowings increased by RM381.9 million to RM11.3 billion, mainly to fund asset acquisitions, landbanking, and investments. Debt-to-equity ratio remained stable at 0.70x, while cash flow interest coverage improved to 4.64x, supported by stronger operating cash flow.

Vanessa Leong, +603-2717 2931/ xinyue@marc.com.my
Cyndy Goh, +603-2717 2941/ cyndy@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my