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5 Reasons Why Healthcare Industry Is Having Bright Future
The healthcare sector is one of the most attractive to me out of all the industries, other than tech & consumer stocks right now.
It provides a defensive yet growing source of earnings because people will eventually get sick one day or another and are willing to pay whatever it takes to become healthy and stay healthy.
There is a boom in the healthcare sector due to population growth, life styles, chronic disease prevalence, aging population and growing medical tourism in Malaysia.
1. Increase in Population
Improved social and economic conditions, a decline in mortality rates and higher fertility rates have furthered population growth in Malaysia.
2. Increasing Population of Elderly People
Malaysia is growing older and many are reaching a time when they require medical services such as geriatric medicine. Increases in mind-altering diseases such as Alzheimer's, diabetic-associated problems and cardiac disease raises the demand for healthcare providers.
In addition, with an emphasis on maintaining a healthy lifestyle, older Malaysians are visiting their doctors and becoming involved in wellness programs, all of which require trained professionals & healthcare serivces providers to meet the demand. Ancillary services such as those that provide durable medical equipment are also increasing.
3. Better Healthcare Availability
With more people are more health conscious & having medical insurances now, more Malaysians are gaining access to healthcare services.
It is estimated that during the 2010-2040 period, the population for the age group 15–64 years and 65 years and over is expected to increase by 1.4 and 6.4 percentage points, respectively, this will increase the need for more healthcare providers in Malaysia.
In addition, with better medical care for chronic conditions, such as kidney disease that requires continuing treatment, the expansion of dialysis centers from respective hospitals or medical centres are normally seen nowadays.
4. Rising Income - Sedentary Lifestyles
Urbanization and rising per capita income have led to an inactive lifestyle in Malaysia. A conspicuous 50% of men and women aged 30 years and older in Malaysia are considered overweight. This has aggravated the prevalence of lifestyle ailments such as diabetes, hypertension, high cholesterol and other cardiovascular diseases.
5. Medical Tourism
Malaysia medical tourism market is expected to grow at a compounding annual growth rate (CAGR) of 30% until 2024.
The medical tourism industry in Malaysia is expected to achieve its targeted revenue of RM1.3bil this year, said Malaysia Healthcare Travel Council (MHTC).
In short, the Malaysia medical tourism sector is booming. Partly due to the increasing influx of medical tourists from the Middle East and North Africa (MENA) region and neighboring countries, and partly due to various macro-economic factors, such as tax exemptions on revenue generated from foreign patients.
Public Listed Healthcare Providers (Hospital/Medical Centre):
1. IHH Healthcare Bhd ---- (PE ratio = 58.4)
2. KPJ Healthcare Bhd ---- (PE ratio = 29)
3. Sime Darby Bhd ---- (PE ratio = 22.3)
4. Sunway Bhd ---- (PE ratio = 17.4)
5. TMC Life Sciences Bhd ---- (PE ratio = 73.8)
6. TDM Bhd ---- (PE ratio = 21.1)
7. Southern Acids Bhd ---- (PE ratio = 12.7)
I will share my findings for the above listed companies in my next article. Please let me know if I have missed out any, thanks in advance.
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Discussions
1 person likes this. Showing 15 of 15 comments
The above listed are owners & operators of hospitals or medical centres.
YSP is in pharmaceutical business, it is in different segment & will not be considered here.
2017-06-14 11:21
Public Listed Healthcare Providers (Hospital/Medical Centre):
1. IHH Healthcare Bhd ---- (PE ratio = 58.4)
2. KPJ Healthcare Bhd ---- (PE ratio = 29)
3. Sime Darby Bhd -------- (PE ratio = 22.3)
4. Sunway Bhd ------------ (PE ratio = 17.4)
5. TMC Life Sciences Bhd - (PE ratio = 73.8)
6. TDM Bhd --------------- (PE ratio = 21.1)
7. Southern Acids Bhd ---- (PE ratio = 12.7)
2017-06-14 12:29
Sri Kota Specialist Medical Centre (Sri Kota) is a flagship tertiary private medical centre in Klang, Malaysia.
Commissioned in October 1999 under the management of Southern Medicare Sdn Bhd, a subsidiary of Southern Acids (M) Bhd, it is strategically situated in the heart of Klang town with ready access to the people.
It is a 9 storey building with 232 beds fully equipped with modern facilities. With its pool of committed specialists and supportive medically trained professionals, Sri Kota takes pride in its acclaim with the ability to provide quality yet affordable healthcare medical services to its patients.
http://www.srikotamedical.com/our-hospital/about-us/
2017-06-14 22:32
Sunway have many others business also la
You cannot take Sunway to compare as its hospital is small portion only ....main is the construction, property
Similar also goes to sime darby
2017-06-14 23:07
hehe, RainT, you are absolutely right!
The contributions from healthcare division of Sunway & Sime Darby are so small to their groups until it was categorised under Others segments, together with other few small divisions.
2017-06-16 22:34
SAB too has different business just like tdm and thus their valuation is not as high. Perhaps can try to better evaluate with SOTP method
2017-06-16 23:36
Yes, ipomember, if use Sum of the parts analysis (SOTP), SAB will get higher valuation target
SAB healthcare division registered Profit before Tax amounting to RM19.4mil.
Apply 25% tax rate, the net profit will be RM14.55mil.
Using 20 times PE, the healthcare division itself will be valued as much as RM291mil
2017-06-17 08:21
SAB net profit for last 4Q was RM57.3mil, take out healthcare division 14.55mil, the balance will be 42.75mil.
Current SAB market cap = 671mil
Healthcare division = 291mil
PE ratio for Oleochemical & Palm oil fruit/mill = 380mil/42.75mil = 8.9 times
2017-06-17 08:27
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you forgot about YSP
2017-06-14 09:21