MHIT will have a pilot launch in the second half of financial year 2026 ahead of a full rollout in 2027.
PETALING JAYA: Analysts continue to have a favourable view of the local healthcare sector due to structural tailwinds and despite policy intervention, primarily aimed at containing healthcare inflation.
The government’s proposed medical and health insurance and takaful (MHIT) plan for instance, aims to contain healthcare inflation in the country but is expected to have a positive spillover effect on private healthcare service providers as well as insurance and takaful operators.
MHIT will have a pilot launch in the second half of financial year 2026 (2H26) ahead of a full rollout in 2027.
It is targeted at individuals who presently lack insurance or takaful protection and those seeking more affordable alternatives to their existing MHIT plans including the 340,000 policy holders who surrendered their plans between January 2024 and June 2025 due to higher premium payments.
RHB Research is not particularly concerned with the impact the proposed move will have on the healthcare sector stocks here.
“While none of the recent initiatives, in our view, amount to a disruptive overhaul, these efforts collectively signal a gradual but structural recalibration of how private healthcare is delivered.
“At the same time, the government’s push towards public-sector reform – particularly at the primary and secondary care levels – is expected to generate spillover effects for private providers,” RHB Research noted in a report on the sector.
It has maintained an “overweight” call on the sector due to robust demand for private healthcare services driven by factors like organic and inorganic expansion, medical tourism and demographic drivers such as an ageing society, a rising middle-class and health awareness.
Kenanga Research, which has a “neutral” call on the healthcare sector, believes the financial impact of the MHIT to private healthcare operators are muted in the immediate term as the plan targets essential care.
“We expect near-term impact to be muted or neutral to private healthcare operators, during the pilot phase.
“Over the longer-term, the implementation of the diagnosis-related group (DRG) system could put pressure on margins for private hospitals but the near-term impact could be minimal as the initial roll-out is expected to target lower-value treatments or minor illnesses.
“Over longer-term growth prospects of the healthcare sector will continue to be underpinned by an ageing population, rising affluence and cases of chronic diseases globally,” it said.
RHB Research however warned the government’s measures will lead to an evolution that tilts bargaining power away from private operators towards insurer payers, potentially capping return on equity expansion over time of healthcare providers as the earnings equation shifts from volume plus price growth to volume plus cost control.
It added Malaysia’s fragmented payer landscape has historically made it difficult for any single payer construct – such as diagnosis related groups – to be implemented at scale and the introduction of MHIT begins to lay the groundwork for insurers to effectively form a collective purchasing front in the market.
Kenanga Research has a “market perform” call on IHH Healthcare Bhd
with a target price (TP) of RM8.50 a share and KPJ Healthcare Bhd with a TP of RM2.80 a share.
RHB Research’s top pick with a “buy” call is KPJ with a TP of RM3.13 a share. The research house noted KPJ offers a refuge from ringgit strength and lesser growth dependency on medical tourism.
Its earnings growth this year is expected to be driven by bottomline accretion as six hospitals emerge from loss-making gestation.
KPJ’s secondary care hospitals could be uniquely positioned to capture MHIT spillover, the research house added.
RHB Research also has a “buy” call on IHH with a TP of RM9.52 a share.
“We like IHH Healthcare for its disciplined execution, strong regional footprint, and focus on a more affluent patient mix, which together underpins earnings resilience,” it stated in a report.
It added the company also is an effective hedge against domestic reset risks, supported by its geographically diversified earnings base.
