PETALING JAYA: Healthcare players may see a faster recovery than most other economic sectors as movement restrictions continue to ease both locally and globally.
As the economy adjusts and transition towards a new normal, a continuous recovery in patient footfall is anticipated, as patients return to hospitals to receive treatment for their delayed procedures.
Optimistic on the sector’s recovery, Hong Leong Investment Bank (HLIB) Research has ascribed an “overweight” call on healthcare.
The brokerage noted that the sector would also receive a boost, given the larger allocation of RM32.4bil, or a 1.6% increase, from the previous year that was granted to the Health Ministry (MoH) in Budget 2022.
It said the increase in budget would be beneficial for Pharmaniaga Bhd, on which it had a “buy” call with a target price of RM1.04.
This, it said, was because there would be more drug purchases since the company is the current sole concession holder to distribute drugs and consumables.
Pharmaniaga recently received a one-year extension for its concession business, from Jan 1, 2022.
MoH’s decision to grant an extension did not come as a surprise, the research house said, given Pharmaniaga’s track record and the infrastructure it has in place to handle the concession business.
could benefit from the procurement of new biomedical equipment as well as maintenance of such equipment.It has a “buy” call on UEM Edgenta, with a target price of RM2.23." src="https://apicms.thestar.com.my/uploads/images/2022/01/07/1434617.jpg" onerror="this.src='https://cdn.thestar.com.my/Themes/img/tsol-default-image2017.png'" style="width: 620px; height: 412px;">HLIB Research said UEM Edgenta Bhd could benefit from the procurement of new biomedical equipment as well as maintenance of such equipment.It has a “buy” call on UEM Edgenta, with a target price of RM2.23.
“We are positive on this development, as the extension would provide continued earnings visibility for the financial year 2022 (FY22),” it said.
It noted that the government has also set aside a RM4bil budget to combat Covid-19, whereby RM2bil would be used for vaccination expenses while the remaining RM2bil is earmarked to enhance the capacity of public health services.
“The potential procurement of Sinovac vaccines to be used as boosters would also be positive for Pharmaniaga.
“Note that there are currently (about) 11 million Sinovac vaccinated individuals in Malaysia, hence that should translate to a maximum potential demand of (about) 11 million doses of Sinovac boosters,” it noted.
IHH is HLIB Research’s top pick for the healthcare sector.
Meanwhile, HLIB Research said UEM Edgenta Bhd could benefit from the procurement of new biomedical equipment as well as maintenance of such equipment.
It has a “buy” call on UEM Edgenta, with a target price of RM2.23.
HLIB Research is expecting in-patient volumes for KPJ Healthcare Bhd and IHH Healthcare Bhd to continue recovering following the relaxation of movement restrictions.
It has a “buy” call with a target price of RM1.32 for KPJ Healthcare and a “buy” call with a target price of RM7.51 for IHH.
IHH is HLIB Research’s top pick for the healthcare sector.
The brokerage noted that IHH’s regional diversification should mitigate the impact of patient volume loss and should a resurgence of Covid-19 cases hit any of its key operating markets.
“The recovery in patient footfall will mainly be supported by returning patients seeking medical treatment for their delayed elective procedures.
“We highlight that after every easing of movement controls such as in the third quarter of 2020 and the second quarter of 2021, hospital operators would experience an uptick in patient volumes.
“However, we expect the recovery this time around to be more sustainable in view of the higher vaccination rate in Malaysia,” it added.
Malaysian hospital operators may also experience a strong rebound in foreign patients, given the country’s position as the leading destination for international patients, it noted.