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MIDF Research positive on healthcare sector

KUALA LUMPUR: MIDF Research has maintained its positive view on healthcare sector citing intact business fundamentals, positive earnings growth and defensive play.

03-10-2011

KUALA LUMPUR: MIDF Research has maintained its positive view on healthcare sector citing intact business fundamentals, positive earnings growth and defensive play.

It said on Monday, Oct 3 that the defensive health care sector was expected to receive investors' attention given the current uncertain market outlook.

As an indication, it said that while the GDP contracted 1.6% in 2009, KPJ Healthcare’s revenue and earnings grew by 14.9% and 29.5% respectively.

In addition, it said rising private health care demand and potential in medical tourism business would continue to drive the sector's future growth prospects as the government is also putting effort to develop the sector.

"Clinical Research Malaysia (CRM) has been established to transform Malaysia into a preferred destination for clinical research in order to tap into global contract research industry worth US$20 billion," it said.

The research house also said the Entry Point Projects (EPP) was targeting to attract two million medical travellers to Malaysia by 2020 from an estimated 410,000 in 2009.

"We believe the likelihood of economic slowdown moving forward will not affect industry fundamentals. For KPJ, we reckon the company will achieve its revenue target of 10% to 15% in 2012," it said.

Given KPJ’s track record in terms of five year revenue and net earnings compound annual growth rate (CAGR) at 18.8% and 30.1%  respectively, MIDF Research said its
expansion strategy of adding one or two new hospitals each year will bode well company’s future growth.

"We also expect KPJ to outperform the market," it said.



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