PETALING JAYA: The positive momentum within the healthcare sector is expected to continue into the next financial quarters, buoyed by resilient demand.
In a strategy note which covered different sectors including healthcare, RHB Research said demand for private healthcare is expected to remain resilient, underpinned by encouraging growth from medical tourists, the rise of non-communicable disease and an ageing society.
The research house noted that while healthcare service providers saw a sequential improvement in patient footfall during the second quarter of 2024 (2Q24) as 1Q24 was slowed by the fasting month, growth from pharmaceutical players remained subdued, owing to a post-pandemic change in consumer spending behaviour.
“We reiterate our ‘overweight’ call on the healthcare sector. We switch our sector top pick to KPJ Healthcare Bhd
on the back of its encouraging growth from its hospitals and strategic initiatives,” RHB Research said.
MIDF Research said it is expecting KPJ and IHH Healthcare Bhd to continue their current positive trajectory, given that Budget 2024 and state budgets continued to favour the healthcare sector.
An ageing population in Malaysia, medical tourism that is expected to exceed RM2bil in revenue this year and an increased demand for digital and artificial intelligence solutions for surgeries and treatments are also factors that will continue to provide a lift to the sector, it said.
Potential downside risks include the rising costs of medical supplies, technology and labour, unfavourable changes to government regulations and data vulnerability amid digitalisation of operations.
Meanwhile, RHB Research said for the pharmaceutical sector, Duopharma Biotech Bhd’s (DBB) 2Q24 results were deemed in line with forecasts, accounting for 48% of the research house’s estimate.
Moving forward, DBB’s growth should continue to be underpinned by higher budget allocations for healthcare and the commercialisation of high-value products in the niche therapeutic areas.
“Nonetheless, we downgrade DBB to ‘neutral’, given slower-than-expected consumer healthcare sales and margin compression arising from higher electricity tariffs and labour costs,” RHB Research said.
It also said Kotra Industries Bhd’s FY24 earnings fell short of expectations, at 82% and 95% of its and consensus full-year estimates, respectively, due to a decrease in consumer demand in local and export markets.
