Hospitals to gain from return of medical tourism

Kenanga Research said medical tourism has returned to the country with vigour. — Photos: Pixabay

KUALA LUMPUR: Hospitals under IHH Healthcare Bhd and KPJ Healthcare Bhd appear to be going strong despite concerns about rising costs.

The demand for private healthcare is seen to be sustainable due to surging cases of chronic diseases across the globe, according to Kenanga Research.

Medical tourism have also returned to the country with much vigour, the research house said.

According to Kenanga Research, IHH is on track to meet its financial year 2023 (FY23) revenue per inpatient growth projection of 10% to 15%, following an 18% increase in FY22.

It also anticipates IHH’s bed occupancy rate (BOR) to be at 60% to 73% this year compared with 56% to 70% in FY22 for its hospital networks in Malaysia, Singapore, India and Turkiye.

“We believe the key growth factor for its inpatient throughput and BOR would be the return of elective surgeries and medical tourists, the addition of new beds which was previously constrained by staff shortages and the first full-year contribution from Acibadem Atasehir hospital,” it said.

Kenanga Research also made note of IHH’s pricing power as the inelastic demand for private healthcare service allowed providers to pass on the higher costs amid rising inflation.

Similarly, it noted that KPJ would be driven by the recovery in demand for elective surgeries.

It said KPJ is on track to meet its forecast FY23 patient throughput growth projection of 14% compared with 12% in FY22 and a BOR of 70% from 58% in the year before.

“Thanks to high patient throughput, two of its new hospitals have turned earnings before interest, taxes, depreciation and amortisation (ebitda) positive while the other two only recorded small operating losses.

“We like KPJ for its pricing power as a private healthcare provider and its strong market position locally with the largest network of 28 private hospitals compared to 16 of the next largest player IHH,” the research house added.

KPJ may also be re-rated soon after the divestment of its loss-making Indonesian operations and its newer hospitals turning ebitda positive after their gestation periods, it said.

Also the rise of health-conscious consumers may see gains for supplement makers such as Kotra Industries Bhd and Nova Wellness Group Bhd.

According to Statista Consumer Market Outlook, the over-the-counter pharmaceuticals market in the country is expected to grow at a compounded annual growth rate of 6% to an estimated US$715mil by 2027, as consumers take a more proactive stance towards their health following the Covid-19 pandemic.

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

High expectations
The global port race: Will Malaysia keep up?
Divergent views on economic prospects
Uplifting local agriculture
Addressing the ripple effect of higher wages
Identifying opportunities for 2024
India economy to exceed growth estimates
OCBC sues money laundering suspect for US$15mil
Asia factory activity weakens, uncertainty on China clouds outlook
Results on track

Others Also Read