Investment Highlights

• We maintain our HOLD call on IHH Healthcare with an unchanged fair value (FV) of RM7.00. We use DCF to value IHH with a WACC of 7% and terminal growth rate of 3.5%. Incorporated in our FV is a 3% premium for our ESG rating of 4 stars for IHH Healthcare.

• Our earnings forecasts are maintained following an analyst briefing yesterday. These are the salient highlights:

• Malaysia operations: 4QFY21 revenue improved 20% YoY due to an improvement in inpatient revenue/admission by 8% and volume by 12% YoY. As a result, EBITDA rose 28% YoY. Average occupancy rate was 52% in 4QFY21.

• Singapore operations: 4QFY21 revenue grew 22% YoY as inpatient revenue/admission’s increase of 17.5% more than offset the volume decline of 11% YoY. As a result, EBITDA expanded 6% YoY. Average occupancy rate was 53% in 4QFY21.

• Turkey and Europe operations: 4QFY21 revenue climbed 17% YoY as inpatient revenue/admission rose by 7%. Inpatient volume was also up 21% YoY. As a result, EBITDA expanded by 14% YoY. Average occupancy rate was 81% in 4QFY21.

• India operations: Revenue climbed 19% YoY as inpatient volume rose by 15% YoY. Inpatient revenue/admission inched up by 3%. As a result, EBITDA leapt 58% YoY. Average occupancy rate was 68% in 4QFY21.

• Gleneagles Hong Kong (GHK) achieved another EBITDA-positive quarter in 4Q2021. Recall that GHK has started to break even in May 2021 during 2Q2021. GHK achieved a 65% occupancy rate in 4Q2021.

• Net gearing has declined to 0.21 as of end-4Q2021 compared to 0.24 as of end-3Q2021. It is also lower than end-2020’s level of 0.28x. This is caused by strong cash flow as IHH continues to grow its business while keeping a lid on its cost increase.

Source: AmInvest Research - 25 Feb 2022