ESG a growing concern for Asean healthcare providers
KUCHING: Analysts expect to see sustainable operations among hospitals, driven by stronger demand for treatments and the digital development – which should lift earnings.
In a special report on Asean hospitals, RHB Investment Bank Bhd (RHB Research) saw that the sector has a pivotal opportunity to unlock value through the environment, social and governance (ESG) and sustainability criteria.
“Historically, investors’ focus has been on environmental factors, but may increase on social factors going forward,” it said. “Hospital firms under our coverage are aware of their ESG responsibilities, but may take time to craft clear quantitative guidance or targets.
“As it is highly relevant to the Covid-19 pandemic, good corporate governance may prove important in supporting an organisation’s operations and capability in protecting all stakeholders during the outbreak.
“The Asean region is characterised by its diversity, so the health status was shaped by the differing rates of socioeconomic development and demographic transitions.
“We see the improving mortality rate based on slower growth in life expectancy trends, and declining fertility rates leading to an ageing society. Greater healthcare resources may be allocated to chronic disease treatment and prevention.”
Looking at the statistics, noncommunicable disease (NCDs) are the leading cause of mortality in Asean, covering circa 62 per cent of all deaths, with about 50 per cent of these occurring in people under the age of 70.
THB Research said the increasing number of NCD cases, coupled with the expanding portion of the ageing population, will result in greater demand for healthcare treatment at hospitals, thereby providing lucrative investment opportunities for private hospital players.
“It may enhance economic burden in Malaysia and Thailand. Meanwhile, Indonesia’s rapid economic progress has also led to lifestyle changes and triggered a higher prevalence of NCDs.
“Healthtech industries have gained traction thanks to the pandemic, with the adoption of digital health solutions skyrocketing. We see the Singapore and Thai governments paying more attention and providing clear plans/roadmaps for healthtech businesses visà-vis their Indonesian and Malaysian counterparts. All public-listed hospital players also have several initiatives in place, to improve operational processes and enhance efficiencies.
“Healthtech is viewed as a revenue enabler rather than a separate business model. Singapore may continue to dominate the region’s investment activity, followed by Indonesia.
“The latter provides ample opportunities owing to its huge population and number of healthcare issues that can be addressed through the adoption of digital platforms.”
For its post-Covid-19 outlook, RHB Research believed hospital players were ramping up their efforts to improve core businesses, namely through digital avenues and to grow operations overseas.
“As the governments will keep the economy and international borders open, we are optimistic on the material rebound in non-Covid-19 out-patients and in-patients, both local and international, through hospitals.
“Spending for healthcare facilities would also remain strong. Concerns over inflationary pressures and lofty valuations will take centre stage in 2022.”