KUALA LUMPUR, March 14 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the week slightly higher, in line with regional indices despite the weaker performance on Wall Street overnight. At 5 pm, the FBM KLCI rose 2.12 points or 0.14 per cent to 1,512.15 from Thursday’s close of 1,510.03. The market bellwether opened 10.08 points lower at 1,499.95, and moved between 1,493.29 and 1,516.25 throughout the day. On the broader market, gainers outpaced losers with 680 to 292, while 437 counters were unchanged, 1,009 untraded, and 13 suspended. Turnover was marginally lower at 3.24 billion units worth RM2.5 billion from 3.25 billion units worth RM2.90 billion on Thursday.
RHB Investment Bank has maintained its OVERWEIGHT call on Malaysia's healthcare facilities and services sector, naming KPJ Healthcare Bhd as its top pick. Despite some short-term challenges, including softer numbers in Q1 2025 due to Ramadan, RHB remains optimistic about the sector's long-term prospects.
Growth Drivers for Healthcare Providers
RHB's positive outlook is driven by several key factors, including:
- Organic expansion strategies
- The growing prevalence of non-communicable diseases (NCDs)
- The impact of an ageing population
These trends are expected to support sustained growth in the sector, even as short-term challenges arise.
KPJ Healthcare's Strong Performance
KPJ Healthcare stands out, with strong contributions from health tourism and improved operational efficiency, particularly from hospitals under development. One of the standout performers, Damansara Specialist Hospital 2 (DSH2), has seen a dramatic improvement in its financials:
- Average monthly revenue surged above RM10 million in Q4 2024, compared to RM3-4 million in 2023.
- Bed occupancy rate (BOR) climbed to 70%, up from below 55% earlier in the year.
This positive trend is expected to help DSH2 reach pre-tax profitability by 2025.
IHH Healthcare's Expansion Plans
IHH Healthcare Bhd continues to expand its operations, with an ambitious target of 4,000 new hospital beds by 2028. Notable ongoing projects include:
- Gleneagles Sarawak, set to house 200 beds by Q2 2028.
- Mount Elizabeth Hospital in Singapore, which will add 56 single rooms by H2 2025.
IHH is also focused on enhancing clinical outcomes and the patient experience, leveraging strong industry trends in key markets for sustained growth.
Pharmaceutical Sector Outlook
The pharmaceutical segment remains strong, with Duopharma Biotech Bhd (DBB) poised for strong sales in the first half of 2025. Key growth drivers for DBB include:
- Consistent demand for its ethical specialty segment
- An increased government healthcare budget of RM45.3 billion for 2025, up 10% year-on-year
- Extension of the Approved Products Purchase List (APPL)
DBB's margins are expected to improve as active pharmaceutical ingredient (API) prices normalize in late 2024.
Regulatory Impact and Long-Term Confidence
Despite concerns about the potential impact of the diagnosis-related group (DRG) pricing mechanism, RHB remains confident in the long-term attractiveness of the healthcare sector. The structural shift toward higher healthcare demand, fueled by demographic trends, continues to drive investor interest in high-quality healthcare assets.
RHB also noted that further study and stakeholder engagement will be needed before the DRG pricing mechanism is implemented, given the complexities of medical procedures and associated costs.
Domestic-Centric Healthcare Players Preferred
RHB has identified KPJ as the preferred domestic-centric healthcare player, given that companies with significant international exposure may face challenges due to inflationary pressures and geopolitical uncertainties.
Comments
Post a Comment