This article first appeared in The Edge Malaysia Weekly on March 23, 2026 - March 29, 2026

THE recent initial public offering (IPO) of Sunway Healthcare Holdings Bhd (KL:SUNMED) has sparked a rally in healthcare stocks, particularly among hospital operators.

Shares of IHH Healthcare Bhd (KL:IHH) and KPJ Healthcare Bhd (KL:KPJ) had hit record highs multiple times this year ahead of Sunway Healthcare’s listing. Last Wednesday, both counters closed at fresh peaks, coinciding with Sunway Healthcare’s debut on Bursa Malaysia’s Main Market.

IHH ended at RM9.39, up 7.3% year to date, while KPJ rose 30.1% to close at RM3.50. Sunway Healthcare, meanwhile, surged 27.6% on its first trading day to RM1.85, giving the company a market capitalisation of RM21.3 billion.

The strong debut signals renewed investor interest in Malaysia’s healthcare sector — long seen as defensive, but increasingly viewed as a growth play.

Some market observers attribute the rally to the valuation benchmark set by Sunway Healthcare’s IPO, which was priced at about 64 times price-earnings ratio (PER) for the financial year ended Dec 31, 2024 (FY2024). By comparison, IHH and KPJ were trading at forward PERs of roughly 34.75 times and 32.12 times respectively in mid-February. As at last Wednesday, Sunway Healthcare’s valuation had surged to 80.43 times forward PER and 84.10 times historical PER based on its FY2025 earnings. Both IHH and KPJ also rerated sharply to around 36.97 times and 57.40 times forward PER respectively, and 39.45 times and 41.82 times PER based on their recent earnings.

Malacca Securities head of research Loui Low says Sunway Healthcare’s listing has in a way rerated healthcare sector valuations. At last Wednesday’s close, Sunway Healthcare was trading at 80.43 times forward PER, which brings the average valuation of the healthcare industry to 55 times compared to last month’s 35 times.

Low expects the valuation gaps of IHH and KPJ to the industry average to present more upside for the counters compared to Sunway Healthcare.

However, he reckons that it is unlikely that IHH and KPJ would reach the same valuation as Sunway Healthcare, which will become an FBM KLCI component stock effective March 25.

“Looking at the share price of Sunway Healthcare, it seems like the market has already valued the counter at the 2032 growth target,” Low tells The Edge.

“I think that investor interest in the counter is due to expectations that Sunway Healthcare will be included in the FBM KLCI,” he adds.

Rakuten Trade head of equity sales Vincent Lau says Sunway Healthcare is likely to continue trading at a premium to its peers, underpinned by its growth prospects and brand strength.

“Sunway Healthcare could remain a standout, with its inclusion in the FBM KLCI and strong investor interest in its growth plans, alongside the broader Sunway Group brand, which is widely regarded as one of the best managed corporate groups in the country,” he continues.

Sunway Healthcare is among Malaysia’s largest private healthcare providers, with 1,805 licensed beds as at January. Its flagship Sunway Medical Centre in Subang Jaya is regarded as the country’s largest hospital. The company’s network spans facilities in Cheras, Penang, Damansara and Ipoh, alongside ancillary services such as ambulatory care, fertility treatment, traditional and complementary medicine, home care and senior living.

The group plans to expand with new hospitals in Seremban, Iskandar Puteri and Putrajaya, as well as a fertility centre in Kota Bharu, which could lift its bed capacity by 74% to more than 3,444 by 2032.

Despite its growth ambitions, Sunway Healthcare remains largely domestically focused. In contrast, IHH operates in 10 countries with about 3,558 licensed beds, while KPJ is the largest by capacity, with roughly 4,100 beds across three countries.

KPJ recently reported record quarterly earnings, helping to underpin its share price. Net profit for the fourth quarter ended Dec 31, 2025 rose 10.3% year on year to RM132.9 million, while revenue increased by the same margin to RM1.15 billion. For the full year, net profit grew 3.4% y-o-y to RM365.93 million and revenue rose 9.2% y-o-y to RM4.26 billion.

Still, Rakuten’s Lau cautions that much of the sector’s optimism may already be priced in.

While structural growth drivers remain intact, he says it remains uncertain whether earnings growth of these medical groups will be strong enough to justify current elevated valuations.

Hospital operators have historically commanded premium valuations due to their scarcity on Bursa, with relatively few listed pure-play healthcare assets.

Smaller players such as Metro Healthcare Bhd (KL:METRO) and TMC Life Sciences Bhd (KL:TMCLIFE) are also trading at elevated multiples. TMC Life, for instance, is valued at about 69 times its historical PER, while Metro Healthcare trades at around 37 times.

Metro Healthcare is also in expansion mode. In October last year, it announced plans to diversify beyond its obstetrics and gynaecology base with the proposed acquisition of RMC Specialist Sdn Bhd, a company owned by its executive vice-chairman and major shareholder, Dr Tay Swi Peng @ Tee Swi Peng, paving the way for the group’s entry into the multi-disciplinary hospital segment.

RMC Specialist plans to develop a four-acre parcel of commercial land in Bandar Rimbayu, Selangor, into a multi-­disciplinary hospital with a total built-up area of 340,000 sq ft.

The first phase will feature 120 beds and five operating theatres, with construction expected to begin in the second quarter of 2026 and be completed by the fourth quarter of 2027.

Metro Healthcare, which currently operates a network of obstetrics, gynaecology and in-vitro fertilisation (IVF) centres, was listed on the ACE Market in November 2024.

Sunway Healthcare also implemented a price stabilisation mechanism to manage volatility following its listing. This could, in turn, provide a stabilised valuation in the healthcare sector.

Maybank Investment Bank was appointed as stabilising manager, with the mandate to support the share price in the event of downward pressure during the initial trading period. Such arrangements, commonly known as a “greenshoe” option, are typical for large IPOs, offering investors reassurance of near-term price support, a broker points out.

A similar approach was used by Leong Hup International Bhd (KL:LHI) during its 2019 Main Market relisting. Despite stabilisation efforts, the stock closed flat at RM1.10 on debut and has since traded below its IPO price. It closed at 78 sen last Wednesday.

Previous exercises such as Xingquan International Sports Holdings Ltd’s IPO in 2009 demonstrated that stabilisation can only buffer short-term volatility and does not guarantee sustained mid- to long-term price performance.

Market participants concur, stating that while stabilisation can help cushion short-term volatility, it does not guarantee sustained performance. “If the stock is attractively priced, the market will support it naturally,” says an analyst. “Stabilisation is not a substitute for fundamentals.”

For Sunway Healthcare, the mechanism appears to have supported a smooth debut, with shares closing comfortably above the IPO price on the first day.

Malacca Securities’ Low points out that the price stabilisation mechanism is only to maintain the IPO price at RM1.45 — it does not artificially boost the share price. “Based on trading on Wednesday, it was investor demand that drove Sunway Healthcare’s performance.”

The healthcare sector was the worst-­performing index on Bursa in 2025, weighed down by earnings pressure and weak investor sentiment.

Foreign selling in key names such as IHH, KPJ and Supermax Corp Bhd (KL:SUPERMX) dragged down the performance of the Bursa Malaysia Healthcare Index.

Despite the recent rally in hospital operators, the broader index has yet to fully recover, as weakness in other players apart from hospital operators continues to weigh on performance.

Over the past year, the Bursa Malaysia Healthcare Index has declined by about 20%. 

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