Philip Capital Research believes healthcare providers are “well-positioned to weather the negative impact of margin contraction in an inflationary environment”.
PETALING JAYA: Malaysia’s expanding medical-tourism industry, supported by higher foreign arrivals to the country as well as the higher allocation to the Health Ministry under Budget 2025, is expected to fuel growth in the healthcare industry .
According to Philip Capital Research, resilience of healthcare businesses’ earnings continues to be driven by an ageing population with better awareness of healthcare issues that in turn, fuels demand for healthcare services and products.
The research house, which has maintained an “overweight” on healthcare stocks, believes healthcare providers are “well-positioned to weather the negative impact of margin contraction in an inflationary environment”.
It noted that the government’s continued focus on healthcare, aiming to strengthen infrastructure and improve access to medical services nationwide, includes an allocation of RM45bil under Budget 2025, or a 10% rise year-on-year.
The research house has “buy” calls on UMediC Group Bhd
with a target price of 85 sen and Optimax Holdings Bhd with a target price of 80 sen.
The research house expects companies under its coverage to deliver year-on-year (y-o-y) earnings growth, driving a 21% y-o-y increase in aggregate earnings among healthcare stocks for 2025.
Earnings would be underpinned by higher inpatient volumes in hospitals, stronger manufacturing contributions from contract manufacturers of medical devices and increasing opportunities from local medical-tourism initiatives.
“For UMediC, we project a 16% to 23% y-o-y earnings-per-share growth, driven by strong demand for medical equipment and contributions from its newly established care centre.
“Optimax is expected to register 14% to 26% year-on-year earnings growth over 2025 to 2026, on the back of its aggressive expansion plans, resulting in an increase in surgical volumes,” the research house said, adding that hospital operators such as KPJ Healthcare Bhd and IHH Healthcare Bhd would be expanding bed capacity to meet increasing demand.
The research house noted that public-private partnerships have been introduced to expand access to high-quality healthcare services through utilising the facilities of private hospitals, a move expected to drive higher hospital occupancy.
“Healthcare providers are also poised to benefit from Malaysia’s expanding medical tourism sector, bolstered by a 27% y-o-y rise in tourist arrivals in the first nine months of 2024, which is expected to increase demand for healthcare services,” it said.
