PETALING JAYA: IHH Healthcare Bhd
is forecast to record three-year forward revenue and earnings before interest tax depreciation and amortisation (Ebitda) at a compounded annual growth rate (CAGR) of 13% overall.
The hospital operator’s India and Malaysia arms were expected to chart robust three-year forward Ebitda CAGR of 20% and 19%, respectively, driven by bed expansion plans and acquisition of Island Hospital in the case of Malaysia, said Maybank Investment Bank Research (Maybank IB Research).
The research house added that Singapore would experience Ebitda margin compression in 2025 due to the renovation of Mount Elizabeth Hospital but it expected this would normalise in 2026.
Maybank IB Research forecast slightly softer three-year forward core net profit CAGR of 11% due to additional finance costs for the Singapore operations.
It still forecast 2024 core net profit to cross the RM2bil threshold for the group overall, adding that it expected pedestrian 2025 core net profit growth of 3% year-on-year.
The research has a “buy” call on IHH Healthcare with a target price of RM7.97 a share.
The research house also said valuations for the healthcare sector were also ripe for a re-rating in 2025 with the possible listing of Sunway Healthcare and Columbia Asia Healthcare.
The key risks for the sector are negative regulatory changes, valuation de-rating and a stronger ringgit.
The research house said it likes IHH as the current demographic shift towards wealthier and ageing populations would drive growth in admissions and revenue intensity, securing long-term growth for private-healthcare operators such as IHH.
History has also proved that private healthcare is also a defensive industry in addition to being a growing one, the research house said, adding that IHH remained focused on organic and opportunistic inorganic growth.
IHH would remain selective about mergers and acquisitions with key criteria being earnings per share and return on average equity being accretive while maintaining a net debt to Ebitda ratio below three times.
The research house said IHH shows promise of growth all all its key markets are pursuing medical tourism.
In Singapore, IHH’s inpatient revenue per admission was high at RM59,439 because 20% of its revenue was derived from foreign patients with 7% from Malaysia, 17% from Turkiye, and 7% from India.
Inpatient revenue per admission had grown rapidly and had almost always outpaced the consumer price index.
The hospital operator has earmarked RM3bil a year for capital expenditure for the medium term.
IHH planned to add 4,000 beds or 33% of its end-2023 figure organically until 2028.
After India, Malaysia had the second most ambitious target of adding 1,300 beds.
