Top Story : Healthcare – The wealth effect Overweight
Sector Update
- Healthcare is a long-term growth business, notwithstanding Khazanah’s willingness to pay a big premium for Parkway.
- In our view, the wealth effect will be one of the primary drivers for growth in healthcare expenditure in Malaysia. The Government has already stated its long-term plans under the New Economic Model to raise per capita income from US$7.6k currently to US$15k in 10 years. Medical insurance, tax incentives and medical tourism will provide the additional growth drivers.
- With the exit of Parkway from the equity market, we believe there will be a scarcity premium attached to the remaining and broadly comparable hospital groups like KPJ. As it stands, regional peers’ average PER has moved up to 18.5x, from 17.9x in Jun.
RHB Equity 360° - 6 August 2010 (Healthcare, Faber, Amway, Notion; Technical: Equine, Boustead)
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