Kenanga Research said the propensity for medical tourism underpins the growth potential for private healthcare operators.
PETALING JAYA: Analysts expect both domestic and international patient throughput to continue growing while revenue intensity improves driven by a high-yield case-mix with more acute cases and ramp-up of new beds.
In a report, Kenanga Research said medical tourism would continue to gain momentum and benefit private healthcare operators in the country.
Recognising the sector’s strong potential, the Malaysia Healthcare Travel Council (MHTC) has set a medical tourism revenue target of RM12bil by 2030.
“We believe the implementation of diagnosis-related group system could put pressure on margins for private hospitals but the near-term impact could be minimal as the initial rollout is expected to target lower-value treatments or minor illnesses.”
“Taking a view of longer-term growth prospects of the healthcare sector, which will continue to be underpinned by an ageing population, rising affluence and cases of chronic diseases globally, our top pick for the sector is Duopharma Biotech Bhd
,” it said, adding that its target price for this stock was RM1.72.
The stock at last look was trading at RM1.27 a share.
In its report, Kenanga Research said the propensity for medical tourism underpins the growth potential for private healthcare operators.
It noted that MHTC has been promoting the medical tourism industry and launched initiatives such as the Malaysia Healthcare Travel Industry Blueprint 2021-2025, a strategic roadmap to guide recovery and rebuild momentum post-pandemic, while positioning the country as the preferred medical tourism destination.
In 2023, the medical visa was introduced by offering shorter processing time of within two working days and it also allowed patients to bring two companions for stays of up to 30 days.
“Malaysia also provides dedicated immigration lanes for medical tourists, healthcare concierge services and lounge facilities at major airports and a dedicated call centre to assist patients in the country. The initiatives have strengthened Malaysia’s position as a medical tourism hub in South-East Asia.”
On Duopharma, the research house expected its bottom line profitability to remain steady due to industry-wide normalisation of input raw material, which has been trending down, and better margins from the Health Ministry’s Approved Product Purchase List (APPL).
It said the company was optimistic that earnings growth this year would come from pent-up demand in the APPL contract, industry-wide cost normalisation of input raw materials which has been trending down and the appreciation of the ringgit versus the greenback.
The research house also said it had a “neutral” weightage on the healthcare sector.
For IHH Healthcare Bhd, it is trading at a one-year forward enterprise value/earnings before interest, taxes, depreciation, and amortisation of 15 times and 14 times on financial year ending Dec 31, 2026 (FY26) and FY27 numbers, according to the research house.
