Thursday 28 Mar 2024
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KUALA LUMPUR: The healthcare sector in Malaysia is “fundamentally healthy” after the implementation of the goods and services tax (GST) and patients are still visiting hospitals for treatment, said IHH Healthcare Bhd managing director and chief executive officer Dr Tan See Leng.

As for the group, the segments it operates in are also little impacted by economic fluctuations, Tan told reporters after a media luncheon yesterday.

For example, he said, IHH’s hospitals are able to treat patients with more complex conditions and complications as the healthcare group has been continuously moving up the value chain by providing high-end integrated services such as oncology and vascular surgery.

“These particular segments are price inelastic, therefore we are not so much subject to all the [economic] fluctuations,” he added.

Meanwhile, he said there is still room for the group to grow post-GST.

“With the implementation of GST, there have been [some] concerns [but] patients are coming to the hospitals for treatment,” he said.

On the impact of the weakening of the ringgit on its earnings, Tan said the group, Asia’s biggest hospital group by market value, is managing the fluctuation of a few currencies and is doing “quite all right” with several hedging positions.

He added that IHH (fundamental: 1.65; valuation: 0.7) is operating in different markets with four or five currencies, including the Chinese yuan, Hong Kong dollar, ringgit, Singapore dollar, Turkish lira and Indian rupee.

Currently, its Singapore business contributes about 30% to group revenue. IHH is expected to announce its second-quarter financial results on Aug 26.

On the valuation of its stock, Tan said investors generally see the outlook of its home business and businesses in the emerging markets to be resilient and quite promising.

“The stock price reflects investors’ confidence in the company's management, strategy and vision,” he added.

The share price of IHH has been on an upward trend since the beginning of the year, rising over 18% from when it was trading at RM4.80 on Jan 2.

IHH closed at RM5.70 yesterday, 2 sen or 0.35% up from Wednesday’s close, for a market capitalisation of RM46.8 billion.

The counter is trading at a price-earnings ratio (PER) of 60.92 times, according to data from theedgemarkets.com.

Another healthcare counter on the local bourse, KPJ Healthcare Bhd (fundamental: 0.95; valuation: 1.1), which closed at RM4.14 yesterday — up 4 sen or 0.98% for a market capitalisation of RM4.32 billion — is trading at a PER of 29.68 times.

IHH operates a network of hospitals providing premium healthcare services with key operations in Malaysia (Gleneagles, Pantai), Singapore (Mount Elizabeth) and Turkey (Acibadem).

 

This article first appeared in digitaledge Daily, on August 14, 2015.

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