PETALING
JAYA: Healthcare expenditure is expected
to rise in this region due to the expanding middle class and income growth,
according to RAM Ratings.
Rising
healthcare awareness is also expected to be one of the key drivers of private
healthcare expenditure.
“With the
exception of Singapore, we expect Asean 4 (Malaysia, Singapore, Thailand and
Indonesia) countries to experience rising income levels and increased spending
on healthcare need,” it said.
However,
it added that despite rising demand from a burgeoning middle class in the last
decade, the overall healthcare expenditure in Asean has lagged that of
developed countries.
Countries
such as Japan and the United Kingdom spend twice as much per capita on
healthcare, compared to Malaysia, Singapore, Thailand and Indonesia.
It added
that global spending on healthcare is expected to increase steadily, rising an
average 5.2% a year in 2014-2018 to US$9.3 trillion.
“Based on
our observation, the major healthcare providers have mostly tapped the equity
market or the banking sector for their funding requirements,” it said.
In 2012,
IHH Healthcare Bhd raised RM6.3bil to partly fund its acquisition of a 60%
stake in Acibadem Saglik Yatirimlari Holding AS (one of the private healthcare
providers in Turkey).
On the
other hand, all the debts of the major players take the form of bank
borrowings.
“Given
their generally healthy profiles, we expect these major players to also be able
to competitively access the bond market,” it added.
RAM noted
that IHH is a reputable player with strong regional franchise.
With an
annual turnover of more than US$2bil, IHH Healthcare Bhd is the largest player
in this region and reputedly the second largest globally by market
capitalisation.
IHH’s
overall operating profit before depreciation, interest and taxes (OPBDIT)
margin of 24%-25% is slightly above its peers’ average as the broad margins in
Malaysia and Singapore are partly diluted by thinner yields in Turkey.
“Since
its initial public offering in 2012, IHH’s gearing ratios have hovered around a
commendable 0.3 times,” it said.
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