Sunway likely to continue pursuing inorganic growth despite failed IJM bid

KUCHING (April 7): Sunway Bhd is likely to continue pursuing inorganic growth opportunities despite its failed takeover bid for IJM Corporation Bhd, according to analysts at RHB Investment Bank Bhd (RHBIB).

In a note on Monday, RHBIB said the setback is unlikely to deter Sunway from seeking acquisitions as the group is always on the lookout for acquisition opportunities involving development land, investment properties, or companies with strategic assets.

It said that while the merger did not materialise, Sunway’s organic growth is expected to underpin near-term earnings.

This will be driven by Sunway Construction Group Bhd’s more aggressive order book replenishment target of RM6 billion, alongside higher property launches and sales, the expansion of Sunway Healthcare Group, and the recent acquisition of MCL Land in Singapore.

“Sunway’s solid earnings track record, from a core net profit of RM461 million in FY20 to RM1.16 billion in FY25, reinforces our expectation on management’s future execution capabilities,” it said.

On Monday, Sunway’s offer to acquire IJM failed to gain sufficient shareholder support, with acceptance reaching only 33.43 per cent, below the required threshold of 50 per cent plus one share.

As a result, the conditional voluntary takeover offer lapsed upon closing at 5pm on Monday, and all acceptances will be returned to shareholders.

Despite the outcome, RHBIB believes management will still pursue inorganic growth opportunities.

It said the offer to take over IJM signals Sunway’s appetite for sizeable acquisitions, especially companies with strategic assets valued at up to RM11 billion to RM12 billion.

The group is also seen as having the financial capacity to pursue such deals, supported by a cash pile of RM1.1 billion to RM1.2 billion.

“Apart from companies with valuable assets, acquisition opportunities may also be landbank for development or investment properties,” it said.