IHH Healthcare (BUY)

Higher Healthcare Growth but also Cost

• Two related articles on today’s dailies reported that:

1. In a new analysis report titled Asia-Pacific (AP) Healthcare Outlook 2012-2015, Frost & Sullivan reported that the region’s healthcare market held 27.5% of global healthcare market share and by 2015, this is expected to grow to 33.1%. Malaysia’s Health Ministry announced that private doctor’s fees are expected to increase up to 14% once the proposed changes to the fee schedule is approved by the cabinet by year-end.

• Frost & Sullivan’s forecast blends well with our bullish outlook for IHH. With its extensive presence in AP, IHH is positioned to gain the most as AP’s global healthcare market share increased.
• On the contrary, increased in private doctor’s fees might be a bane to IHH, encouraging consumer to approach public healthcare service as an alternative. However, we think that the impact to IHH is small due to the shortage in quality healthcare services in Malaysia.
• We reiterate our BUY rating on the stock with SOP-derived target price of RM3.49.

Source: Hong Leong Investment Bank Research - 27 July 2012