Healthcare industry will continue to enjoy growth, says Kenanga Research

Healthcare industry will continue to enjoy growth, says Kenanga Research
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KUALA LUMPUR (Sept 8): Kenanga Research has maintained its “overweight” rating on the healthcare sector and said there was a slight sequential deterioration in the recently concluded 2QCY22 results season (against expectations).

In a note on Thursday (Sept 8), the research house however said it believes that the healthcare industry will continue to enjoy growth, supported by growing healthcare expenditure, rising medical insurance coverage, and an ageing population demographic.

“Our top pick is IHH Healthcare Bhd (outperform; TP: RM7.20) premised on: i) its pricing power, as the inelastic demand of healthcare allows the passing-on of higher cost amid rising inflation; ii) strong pent-up demand, especially for elective surgeries, from domestic and international patients as economies come out of the pandemic; and iii) its commanding market position in countries it operates in.

“On the other hand, KPJ Healthcare Bhd is unattractive from the standpoint of equity investment over the short term, as its new hospitals are still under the earnings-dilutive gestation period,” it said.