KUALA LUMPUR (Aug 13): The healthcare sector in Malaysia is “fundamentally healthy” even 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.
“There is still room to grow. With the implementation of GST, there have been [some] concerns [but] patients are coming to the hospitals for treatment,” he told reporters after a media luncheon today.
He also said its hospitals are also able to treat 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, vascular surgery and others.
“These particular segments are price inelastic, therefore we are not so much subject to all the [economic] fluctuations,” he added.
On the impact of the weakening of ringgit against Singapore dollar to 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 alright” 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.
Meanwhile, 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, risen over 18% from when it was trading at RM4.80 on Jan 2.
At 3.31pm, IHH was trading at RM5.67, 1 sen or 0.18% lower from yesterday’s close, for a market capitalisation of RM46.71 billion.
The counter is trading at a price-earnings 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 was at RM4.14 at the time of writing — up 4 sen or 0.98% from yesterday’s close — is trading at a PE 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).
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)