Investment Highlights

• We maintain our HOLD recommendation on IHH Healthcare with an unchanged FV of RM5.30/share based on DCF. Our fair value of RM5.30/share implies an FY19F PE of 40.9.

• FY18 core net profit came in within our expectations but exceeded consensus estimates by 14.1%.

• Key highlights of IHH’s 4QFY18 results included:

• IHH’s FY18 topline grew 3.4% YoY (+19% YoY excluding forex effects) to RM11,502mil due to a sustained growth from existing operations and the inclusion of Amanjaya and Fortis’s sales contribution which amounted to RM8.8mil and RM217.1mil respectively.

• IHH’s EBITDA improved 8.7% YoY while the group’s core net profit soared 38.8% to RM909.5mil on stronger operational performance across its operations.

• Parkway Pantai’s FY18 topline and EBITDA increased 8% to RM7,450.4mil and 13% to RM1,518.2mil respectively due to the continuous ramp-up of Pantai Hospital Manjung, Gleneagles Kota Kinabalu Hospital and Gleneagles Medini Hospital. Gleneagles Hong Kong Hospital’s startup losses have also decreased to RM178.1mil from RM284.0mil in FY17. Amanjaya and Fortis have contributed RM4.0mil and RM13.5mil respectively since acquisition.

• Comparing FY18 with FY17, inpatient admissions increased at Parkway Pantai’s Singapore, Malaysia and India Hospitals – up 0.6%, 3% and 23.3% respectively. Revenue intensity per inpatient improved in its Singapore and Malaysia hospitals by 7.7% and 6.1% respectively but declined in its India hospitals by 1.7% as Fortis’ revenue intensity is generally lower than Parkway Pantai’s existing operations in India.

• Excluding the currency translational effects, Acibadem Holdings’ topline rose 32% whiles its EBITDA jumped 38% YoY in FY18. This was on the back of organic growth in its existing operations as well as the full-year operational impact of Acibadem Altunizade Hospital (opened March 2017) which grew 51% YoY.

• Acibadem Holdings’ inpatient admissions grew 7.4% in FY18 while its inpatient revenue intensity grew 24.4% with price increase imposed on private insurance and out-ofpocket patients. There were also more complex cases taken as well as an increase in foreign patients.

Source: AmInvest Research - 28 Feb 2019