PETALING JAYA: IHH Healthcare Bhd
’s growth momentum remains intact as the group expands its business in tandem with rising demand for healthcare services.
In mature markets such as Singapore and Hong Kong, IHH intends to shift its focus beyond tertiary care to preventive care such as expanding ambulatory-care services to ease the congestion in hospitals.
The group plans to retain its China division (Parkway) and to turn around the business, said RHB Research.
Its new bed count target (up 33% or 3,800 beds in the next five years) highlighted IHH’s ambitions for growth primarily in developing countries such Malaysia and India, as 34% and 48% of the new beds, respectively, are being allocated for these markets.
The rationale behind the expansion plan was due to its current low beds-per-1,000 population ratio for both Malaysia (2.1) and India (1.7), which still falls short of that of developed nations such as Singapore (2.5), RHB Research noted.
TA Research, meanwhile, expects IHH’s financial year 2023 (FY23) earnings before interest tax depreciation and amortisation (ebitda) margin to increase to 23.4% versus 22.8% in FY22.
Kenanga Research expects IHH’s revenue per inpatient growth to be 10% to 15% (versus 18% in 2022 due to low-base effect in 2021), and inpatient throughput growth of 10% to 15% versus 10% in 2022.
It also expects bed occupancy rate (BOR) of 60% to 73% versus 56% to 70% in 2022 for its hospitals in Malaysia, Singapore, India and Turkiye.
The key growth factor for its inpatient throughput and BOR will be the return of elective surgeries and medical travel, in addition to new beds (previously constrained by staff shortages) and the first full-year contribution from Atasehir hospital in Acibadem, Turkiye.
RHB Research has a “buy’’ call on the stock with an unchanged target price (TP) of RM6.90.
It said the consolidation of newly acquired hospitals, easing inflation pressure from Turkiye and the conclusion of Fortis’ mandatory takeover offer (MTO) are key re-rating catalysts in the near term.
IHH’s net gearing dropped to 0.29 times in September from 0.36 times in June.
The company also continued to pare down borrowings and the group’s healthy balance sheet meets its merger and acquisition requirements.
The near-term priority was still on paring down borrowings while identifying non-performing assets for disposal.
TA Research maintained a “hold’’ call on the stock with a TP of RM6.30, while Kenanga Research kept its “outperform’’ call with a TP of RM7.00.
Kenanga Research said the key risks to its call include regulatory risk, risks associated with overseas operations, and the lack of political will to roll out a national health insurance scheme.
