KUALA LUMPUR (Feb 2): PublicInvest Research has retained its “overweight” rating for the healthcare sector, and said it remains positive on Malaysia’s healthcare sector in the medium term, supported by the increasing trend of an ageing population, growth in medical tourism, as well as the overall increase in demand for medical services.

In a sector update on Friday, the research house said that while the introduction of the Health White Paper which entails potential collaborations through public-private partnerships would ease the overcrowding situation in the public sector, we foresee challenges during the implementation phase.

“Nevertheless, we believe this is not likely to affect the private sector in the near term.

“Hence, we remain 'overweight' on the healthcare sector, and reiterate our 'outperform' calls on KPJ Healthcare Bhd and IHH Healthcare Bhd, in view with a rising number of inpatient volumes and bed occupancy rates, while maintaining 'neutral' on Apex Healthcare Bhd on slowing demand for its core respiratory illness products,” the research house said.

Moving forward, PublicInvest said medium-term prospects for the Malaysian healthcare sector remain intact, supported by increasing demand for medical services due to an ageing population.

Also, it said the granting of up to 30-day visa-free entry to Chinese and Indian citizens should bode well for the Flagship Medical Tourism Hospital Programme.

“Moreover, the rising obesity rate among children and adolescents would lead to greater demand for healthcare services, including pharmacotherapy, bariatric surgery, preventive care, diagnostics, and other treatment options.

“Moving to the first half of 2024, an increasing number of inpatients and outpatients is anticipated, leading to higher bed occupancy rates.

“Our top pick is KPJ, hinging on growth in its inpatient volume and bed occupancy rate.

“We continue to like its efforts in identifying and optimising underperforming assets, coupled with improvements in routine business operations and processes.

“Additionally, KPJ also aims enhance a culture of cross-referrals within its facilities to ensure patients receiving optimal experiences and clinical outcomes,” the research house said.