Kenanga Research reiterated its “overweight” call on the healthcare sector.
PETALING JAYA: Malaysia’s healthcare industry is expected to register robust growth amid rising demand for medical services from both domestic and international patients.
The local pharmaceutical and over-the-counter (OTC) drugs sales are also expected to thrive amid increased health awareness in the country.
Given the favourable trends, Kenanga Research reiterated its “overweight” call on the healthcare sector. The brokerage’s top sector pick is private hospital operator IHH Healthcare Bhd
.
“The demand for healthcare, a basic necessity, is inelastic despite high inflation. Another key driver (of growth) is rising chronic diseases across the globe,” Kenanga Research said in its report yesterday.
It noted that global healthcare expenditure was projected to grow at a compounded annual growth rate (CAGR) of 3.5% to reach US$10 trillion by 2026, underpinned by rising affluence and ageing populations.
According to the World Health Organisation, almost half of the global healthcare expenditures (US$4 trillion) would be spent on three leading causes of death, namely, cardiovascular diseases, cancer, and respiratory diseases, Kenanga Research noted.
“We project IHH’s patient throughput growth and revenue intensity to drive 2024 earnings, propelled by more acute cases including elective surgeries.
“IHH expects its earnings momentum to accelerate, underpinned by revenue intensity and rising demand in the second half of 2024,” it said.
“It has pegged its charges to patients to consumer price index across all its key markets. It expects strong patient throughput in Turkiye, Singapore and Malaysia after the festive season in the first quarter of 2024,” it added.
Kenanga Research projected IHH’s revenue per inpatient growth of 12% to 16%, inpatient throughput growth of 9% to12% and bed occupancy rate (BOR) of 65% to 73% for its hospitals in Malaysia, Singapore, India and Turkiye.
Similarly, the brokerage projected KPJ Healthcare Bhd’s patient throughput to grow at 9% with BOR at 72%, driven by revenue intensity emanating from the recovery in demand for elective surgeries.
As for the OTC pharmaceuticals market in Malaysia, a CAGR of 6% is expected for it to reach US$715mil by 2027, Kenanga Research noted, citing independent market researcher the Statista’s Consumer Market Outlook.
This growth is underpinned by consumers taking a more proactive stance towards their health and well-being, especially in the aftermath of the Covid-19 pandemic.
“The trend augurs well for Kotra Industries Bhd which manufactures and sells OTC supplements and nutritional and pharmaceutical products under key flagship household brands,” Kenanga Research said.
It was also positive on Nova Wellness Group Bhd’s prospects, backed by a new plant, widening distribution network and penetration into local public hospitals.
“We expect the 2024 sales volume of Nova to rise by 5%,.
It will be fuelled by gradual ramp-up of its new plant and the full-year impact from introduction of 15 to 20 new stock keeping units in 2023 (in addition to 35 in 2022) including skincare products, health supplements, and Activmax and Sustinex range of functional food products such as plant-based protein including specialty Activmax for hospitals,” Kenanga Research said.
