KUALA LUMPUR (Jan 13): The Malaysian healthcare sector could see a broader rerating in 2026, driven by potential initial public offerings (IPOs) from major players including Sunway Healthcare Holdings Bhd, Asia OneHealthcare, and Big Caring Group, according to Hong Leong Investment Bank (HLIB).

It highlighted three key drivers for this rerating: valuation benchmarking, capital inflows, and a shift in market narrative and perception. 

Further support comes from the Malaysia Healthcare Masterplan 2026 (MYMT 2026), which targets RM12 billion in healthcare revenue by 2030, representing a compound annual growth rate (CAGR) of 32%.

In a report on Tuesday, HLIB maintained its 'overweight' call on the healthcare sector, with its top picks being IHH Healthcare Bhd (KL:IHH) with a target price of RM9.43 and KPJ Healthcare Bhd (KL:KPJ) with a target price of RM3.16.

Sunway Healthcare and Asia OneHealthcare are targeted for listing in 2026, with the valuation of both companies reported to be at least RM16 billion in market capitalisation.

HLIB said beyond hospitals, pharmaceutical chains and primary care assets are also entering the IPO narrative, namely Big Caring Group and Qualitas Health Group, while visibility of the timing and valuation remains limited. 

The research house said that major healthcare IPOs are expected to establish new valuation anchors and attract inflows from global healthcare-focused funds, expanding the domestic healthcare sector's investor base and liquidity.

"Mega IPOs like Sunway Healthcare are likely to establish new valuation anchors, with investors asked to value the company more than 27 times in 2026 earnings," HLIB added.

The research house said that Malaysia recorded higher medical tourism revenue with a CAGR between 2019 and 2023 of 7.3% in comparison to regional peers like Thailand (+5.1%) and Singapore (+0.4%), indicating Malaysia as the top preference for medical tourism in the Southeast Asia region.

"We see MYMT 2026 is well-timed, coinciding with Visit Malaysia Year 2026, Singapore's increasing pivot towards specialised, complex treatments, as well as near-term disruptions in Thailand's tourism sector."

HLIB highlighted Alpha IVF Group Bhd (KL:ALPHA) as the primary beneficiary of MYMT 2026, as the group's revenue exposure is about 60% and 70% Malaysian operations in health tourism.

The house also noted Malaysia’s ageing population, the fourth highest in selected Asean countries, which is expected to increase demand for private hospitals and boost patient volumes.