KUALA LUMPUR (Feb 19): RHB Small Cap Asean Research sees LAC Med Bhd (KL:LACMED) as a play on Malaysia’s healthcare modernisation, assigning an 13% upside in its initiation report on the company which was listed on the Main Market of Bursa Malaysia in December 2025. 

The company, Malaysia’s largest third-party medical equipment distributor, is expected to grow due to hospital bed shortages, rising non-communicable diseases, ageing population, and its planned expansion into Indonesia.

RHB said LAC Med stands out with a strong 21-year track record and long-term relationships, giving it a competitive edge. 

“We believe LAC’s established footprint creates a high barrier to entry for competitors,” it said. LAC Med is present in 58% of Malaysian hospitals, or 217 facilities, and 832 clinics.

Reliability is key in the medical equipment sector, as products last eight to 12 years and require consistent long-term support. Distribution agreements are often short-term, with principals able to terminate underperforming partners, making execution credibility essential.

In 2025, LAC Med added five new principals, including Abbott and Baxter, while managing its product offerings to avoid internal competition and enhance cross-selling opportunities.

As of 2023, Malaysia’s private healthcare sector had about 18,800 beds, expected to rise to 22,800 beds by 2028, a 4% compound annual growth rate (CAGR) based on expansion plans by IHH Healthcare Bhd (KL:IHH), KPJ Healthcare Bhd (KL:KPJ), and Sunway Healthcare Holdings Bhd. This growth will boost demand for medical equipment, diagnostics, and healthcare technology, benefiting distributors like LAC Med.

The public healthcare sector is also expanding, with a 7.8% CAGR in budget from 2021-2026. Malaysia’s healthcare spending remains below the OECD average, indicating room for growth.

Beyond domestic borders, the company is allocating RM8 mil of its initial public offering proceeds to scale its Indonesian operations. While currently focused on a single principal, Alpinion, the segment is expected to contribute meaningfully to revenue by the financial year ending Dec 31, 2026 (FY2026)-FY2027, as it taps into a market nearly eight times larger than Malaysia.

RHB expects LAC Med to grow at a three-year core earnings CAGR of 18.2% through FY2027. 

The company is valued at a 15.7 times two-year forward price-earnings ratio, in line with global peers, implying a 34% premium over local peer UMedic Group Bhd (KL:UMC). 

The premium is justified for several reasons. First, LAC Med distributes established global brands like Philips and Samsung, which carry lower product and commercial risk compared to UMedic’s own-brand model. Second, LAC Med has a larger earnings base and stronger three-year earnings growth of 18.2%, compared to UMedic’s 13.6%. Third, LAC Med can undertake technically complex projects, such as radioactive-related  projects via its Atomic Energy Licensing Board (AELB) licence, which creates higher barriers to entry and supports more defensible earnings. 

For FY2026, RHB forecasts a recurring net profit of RM29 million on RM288 million in turnover, backed by a robust order book of RM195.1 million, with RM128.4 million tied to complex supply and integration projects.

LAC Med is Malaysia’s largest authorised distributor of Philips medical equipment, with a de facto exclusive position due to Philips’ single-channel distribution model. While risks include regulatory changes, reliance on Philips (63% of purchases in FY2024) and potential project delays. 

LAC Med’s shares were up 4.66% to RM1.01 a share at the midday break on Thursday, valuing the company at RM401.9 million. 

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