Healthcare services sector to benefit from Prihatin stimulus

PETALING JAYA: Companies involved in the services sector of the healthcare industry are poised to benefit from the recently announced Bantuan Prihatin Nasional (BPN) stimulus package, says Hong Leong Investment Bank (HLIB) Research.

The BPN stimulus package will see RM1bil being allocated for Covid-19 equipment and services, which include services from private hospitals, it said. Add to this another RM600mil allocated to the Health Ministry (MoH) previously announced in the first economic stimulus package.

Companies that are poised to benefit include Pharmaniaga Bhd and UEM Edgenta Bhd, the research house said.

“We feel the RM1.6bil allocation would benefit Pharmaniaga, as it is the conduit for the distribution of medicine and medical supplies to government hospitals and clinics nationwide, ” it said.

“For Pharmaniaga, while business continues as usual during the movement control order or MCO period, we expect some growth in revenue due to an increase in demand (5% of products supplied are Covid-19 related), ” it added.

HLIB Research said that it is within its knowledge that the coordination and implementation of procurement, handling, warehousing and distribution of the recent contribution of RM40mil from the government-linked companies and the disaster response network will be done through Pharmaniaga.

It noted also that Pharmaniaga is procuring around RM45mil worth of ventilators for the government.

“With the expected additional volume and the extra scope of works given to the MoH, this should likely boost Pharmaniaga’s topline, ” it said.

HLIB Research said that it believes UEM Edgenta could potentially be involved in the procuring process for the allocation for Covid-19 equipment.

“This also presents an opportunity for its Biomedical Engineering Maintenance Service division to undertake its maintenance, ” it said.

“UEM Edgenta’s scope of service with the MoH includes the sanitisation of hospitals. UEM Edgenta has not sat idle during this period and saw an opportunity to expand the sanitisation and disinfection treatment. We understand that this has begun with around three million square feet of commercial buildings, ” the research house added.

HLIB Research has maintained its “overweight” stance on the sector for its defensive qualities with a “buy” call on Pharmaniaga (target price of RM2.30), given that there will be no disruption of business operation with the five-year concession extension granted by the MoH.

It is also rating UEM Edgenta a “buy”, with a target price of RM3.56 for its defensive earnings profile and its pivot towards healthcare support services regionally.

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