SINGAPORE (March 13): CIMB is starting coverage of private healthcare provider Health Management International with an “add”.
HMI is a private healthcare provider with two hospitals in Malaysia, specifically Mahkota Medical Centre (MMC) in Malacca and Regency Specialist Hospital (RSH) in Johor.
HMI, backed by a 20-year track record, is one of the first hospital groups in Malaysia to adopt the Singapore private healthcare model.
“We believe HMI would be a long-term beneficiary of these structural trends in Malaysia – ageing population, rising insurance penetration and shortfall in hospital beds,” says lead analyst Ngoh Yi Sin in a Monday report.
HMI has about 10% market share of Malaysia’s medical tourism, which contributes about 30% of revenue. Meanwhile, IHH Healthcare has 5-10% market share while KPJ Healthcare has 5%.
Ngoh sees growth potential from intensified marketing efforts aimed at foreign patients in the region and favourable government initiatives.
“Development of more Centres of Excellence and a range of medical specialties could add to that, in our view,” says Ngoh.
Patient numbers at both hospitals have been promising at FY11-16 CAGR of 9%, owing to their accessible locations, affordable pricing and high-quality healthcare.
To meet increasing patient demand, HMI has announced that it plans to add beds by 10% at MMC, and launch a new extension of RSH which will more than double its bed capacity.
CIMB is also positive on the consolidation of minority interests in MMC (51.1%) and RSH (39.2%) as the reformed structure would facilitate operational flexibility and ease of financing.
“We initiate coverage on HMI with an “Add” rating and a DCF- based target price of 81 cents,” says Ngoh.
Shares of HMI are up 3 cents at 66 cents.
