PETALING JAYA: RHB Research expects demand for private healthcare to remain resilient, underpinned by growth in medical tourism, the rise of non-communicable diseases and an ageing population.
This is despite the soft results from the sector in the recent results season, with payer negotiations and the shift to a daycare model weighing on inpatient growth.
Revenue intensity rose on efficiency gains, while earnings before interest, taxes, depreciation and amortisation (Ebitda) margins held steady, despite the drag from maturing hospitals.
RHB Research, which kept an “overweight” call on the healthcare facilities and services sector said payer pressure is reshaping hospital economics with fewer inpatient admissions, structurally lower revenue intensity, and declining bed occupancy rates.
“Operators that pivot capacity toward daycare, ambulatory, and surgical services, while improving cost efficiency, are best positioned to mitigate these pressures,” the research house noted.
On the sector’s outlook, RHB Research said it believes the ongoing shift in the case mix towards a daycare format could be structurally favourable. Daycare procedures are typically priced at almost half that of inpatient cases, but higher patient turnover, lower running costs, and greater efficiency help offset the gap.
More importantly, the shift frees up inpatient beds, which can then be prioritised for complex surgical cases rather than lower-yield medical cases.
“This reallocation supports sustained improvements in revenue intensity, even as overall inpatient growth moderates.
“Taken together, we see operators well-positioned to adapt to payer-driven changes, with demand resilience underpinned by demographic and structural healthcare trends,” RHB Research said.
KPJ Healthcare Bhd
remains the research house’s top pick with a target price of RM3.05. Despite recent share price weakness, it said KPJ still trades at a 7.2% premium to IHH Healthcare Bhd’s forward-rolling enterprise value/Ebitda.
“While we recognise KPJ’s concentration risk as its revenue is predominantly derived from Malaysia, we also maintain our ‘buy’ call on IHH, as it offers a more diversified revenue base,” the research house added.
