There was a slight sequential deterioration in the earnings delivery of the Healthcare sector seen in the recently-concluded 2QCY23 results reporting season with 50% coming in below vs. 50% coming in within forecasts copared to the preceding quarter.
Kenanga Research cited today (Sept 6) that out of the six companies under their coverage, three came within our forecasts, i.e. KPJ, KOTRA and NOVA (OP; TP: RM0.96), whereas the other three disappointed, i.e. IHH, PHARMA and MGRC (OP; TP: RM0.80).
In general, private hospitals under their coverage were hit by less patients seeking treatment during the festive month. Both IHH (OP; TP: RM7.00) and KPJ (OP; TP: RM1.50) expect patients to return in subsequent quarters.
On the other hand, PHARMA (UP; TP: RM0.30) was hit by higher-than-expected operating cost. Over the longer term, the growth prospects of the healthcare sector will continue to be underpinned by an aging population, rising affluence and rising cases of chronic diseases globally.
Kenanga reiterates and OVERWEIGHT call on the sector with top picks being KPJ and KOTRA (OP; TP: RM7.00).
