KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) has maintained its 'Overweight' call on the Malaysian healthcare sector for 2025, with the hospital segment as its reference.
The investment bank stated that upcoming initial public offerings (IPOs) are driving a re-rating, which further supports its long-term resilient growth prospects.
"Notably, Asia One Healthcare (formerly Columbia Asia Healthcare) and Sunway Healthcare Group are expected to list by 2026 or earlier," it said.
HLIB Research has picked IHH Healthcare Bhd as its top pick, citing significant potential for share price growth in the event of an IPO-driven re-rating.
"IHH's Malaysian operations are among its strongest hospital assets, performing on par with Sunway Healthcare across all operational and financial metrics," it added.
Furthermore, HLIB Research pointed out that in response to the 12.6 percent medical inflation in 2023, a series of initiatives were proposed in the second half of 2024 (2H24).
"We believe the government will continue with the planning and development of the diagnostic-related group (DRG) payment system for a different purpose—to roll it out alongside the future National Health Insurance (NHI) scheme (in line with global practices), as outlined in the Health White Paper," it said.
The bank-backed research firm said it anticipates that concerns surrounding DRG-related regulations may ease over time as stakeholders engage in more comprehensive discussions and conduct detailed cost-benefit analyses.