KPJ Healthcare Bhd, IHH Healthcare Bhd and UMediC Group Bhd are the healthcare stock top picks at Affin Hwang Investment Bhd.
In a research note released this morning, the research house has maintained its ‘overweight’ stance on the sector, as it believes earnings resiliency will be supported by ongoing demand for healthcare-related products and services.
It said it picked KPJ (Buy, 52-week target price of RM6.70) due to the strong ongoing inpatient volume momentum coupled with its successful cost optimisation efforts while Umedic (Buy, RM1.00) on its strong earnings growth potential driven by the ongoing manufacturing expansion.
For UMediC, it said it liked the counter for its ongoing expansion plans which will allow it to tap on the surge in demand for its prefilled humidifiers, as foreign manufacturers look to outsource production to relatively cheaper countries.
It noted that the 1Q23 inpatient volumes for IHH (Buy, RM6.70) and KPJ’s Malaysian hospitals have exceeded pre-pandemic levels.
“We gather that the momentum has sustained in recent months. Both companies are carrying out efforts to increase the bed capacity to cater to such improved demand. We do not foresee risks in earnings delivery for both companies due to the strong occupancy rates coupled with the ability to pass on higher costs by repricing its services,” it said.
At 9.20am today, KPJ was trading at RM1.14, UMediC at 74 sen and IHH at RM5.76. –TMR