Maybank IB Research said it believes that market has priced in the negatives ahead of fundamentals.
PETALING JAYA: Malaysia’s private-healthcare operators are expected to see a continuous uptrend in inpatient admissions, more complex cases and patients travelling here from abroad to obtain medical treatment.
Maybank Investment Bank Research (Maybank IB Research) said while it is cautious about the risk of unfavourable regulatory changes, it believes that market has priced in the negatives ahead of fundamentals as implementation of the diagnosis-related group (DRG) system can only be rolled out beyond 2025.
The DRG pricing system was recently mooted by the government to regulate private hospital bills.
It places hospital services into categories according to a patient’s condition, and charges according to a fixed rate.
“The healthcare sector remains defensive as private-healthcare expenditure grows in tandem with the nominal gross domestic product of the population.
“We expect greater patient admissions and case-mix complexity.
“This is especially related to cardiology, oncology and non-communicable diseases, which should generate higher margins versus traditional surgeries or treatments.
“This is largely supported by Malaysia’s ageing population and increasing affluence, increasing bed numbers and rising bed-occupancy rates in private hospitals,” the research house said.
On the prospects of medical tourism, Maybank IB Research said that Indonesia’s growing demand for more advance healthcare has led to an influx of medical patients into Malaysia.
This is especially so for Penang, Kuala Lumpur and Johor.
This was positive for the sector as foreign patients typically register about 20% higher revenue intensity due to a greater concentration in complex cases such as cancer and the need for more care.
According to the research house, IHH Healthcare Bhd
stands to be the biggest beneficiary of medical tourism into Penang.
This also applied to KPJ Healthcare Bhd in Johor with the launch of the Johor-Singapore Special Economic Zone.
“Earnings should remain intact in the near-term as DRG implementation will likely be after 2025, in our view.
“In the mid to longer term, eventual roll-out will be phased in over several years, which should allow hospitals to adjust, keeping impact on margins minimal.”
