• Healthcare sector has the second-lowest digital consumer adoption rate globally, falling behind industries such as entertainment, banking, and utilities. However, when combined with 5G connectivity, we believe 5G-enabled application and AI could transform various aspects of healthcare.

• The telehealth market is expected to expand rapidly, allowing patients to consult specialists remotely. However, remote surgery have not yet been adopted widely due to concerns around security and risks that remain unresolved.

• Regionally, South Korea leads in 5G, improving efficiency by 25% in telehealth segment while Singapore who has the highest 5G coverage is expected to drive a 25% CAGR in the telehealth market through 2025.

• Maintain an OVERWEIGHT call on the Healthcare Sector with a BUY call on IHH (TP: RM7.88).

Healthcare Transformation to Digitalisation

The integration of telecom connectivity and medical devices has long been a priority for hospitals and healthcare authorities, who value its innovative potential. We believe that 5G’s transformative capabilities can drive digitalization in the healthcare sector. With features like low latency, massive connectivity, an expanded spectrum as well as enhanced reliability, 5G can significantly improve healthcare delivery in Malaysia, leading to better access to services and increased operational efficiency. According to McKinsey, healthcare currently ranks second-lowest in global digital adoption, but 5G can enhance its technological applications, facilitating AI, augmented reality (AR), and the Internet of Medical Things (IoMT) for personalized treatments and expanded remote care. By leveraging 5G connectivity, healthcare providers can enhance service delivery, particularly in underserved regions, as several APAC countries have already partnered with telecom companies to develop digital healthcare solutions.

Connecting the Dots - 5G Infrastructure and Healthcare Advancement

In terms of 5G availability, Malaysia ranks fourth in the APAC region, following India, Singapore, and South Korea, but still lags behind in telemedicine and AI adoption. Singapore stands out with robust 5G investments and extensive healthcare digitalization, illustrating the link between advanced 5G infrastructure and healthcare innovation in countries like Singapore and South Korea. 

Maintain OVERWEIGHT on Healthcare Sector

All in all we maintain OVERWEIGHT call on healthcare. Going ahead we opine that Healthcare sector is set for robust future on the back of (i) increasingly discerning patients, (ii) greater affordability with accessible credit facilities like credit cards and medical insurance, (iii) rising demand for elective surgeries, (iv) organic sector growth, (v) the digitalization of healthcare services, (vi) a growing trend in health tourism, and (vii) an aging population. We also maintain a BUY outlook on IHH (TP: RM7.88)

Source: BIMB Securities Research - 8 Nov 2024