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Publish date: Sun, 02 Apr 2023, 07:07 PM
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IHH Healthcare is one of the world's largest healthcare networks.  There are three segments in IHH healthcare: Parkway Pantai, Acibadem and IMU. Parkway Pantai has a network of 58 hospitals throughout the region, including Malaysia, Singapore, India and Greater China, Parkway Pantai is one of Asia’s largest integrated private healthcare groups. Acibadem Holdings is Turkey’s leading private healthcare provider, offering integrated healthcare services across 22 hospitals in Turkey, Macedonia, Bulgaria, the Netherlands and Serbia. The “Acibadem” brand is renowned for its clinical excellence in Europe and North Africa regions. The International Medical University is IHH’s medical education arm. IMU oversees the established higher learning institutions of International Medical College and IMU in Malaysia. In the three segments, Parkway Pantai consists of healthcare and REIT, the contribution of revenue and profits in this segment to the group in FY2021 are 15billionand 4billion respectively, Acibadem Holdings’ revenue 4.3billion and Profit 689million, IMU’s revenue 260million and profit 54million. Therefore, from here we can see Parkway Pantai accounts for 77% of revenue and 84% of net profit, Acibadem Holdings account for almost the rest of the revenue and net profit, while IMU account for 1% of revenue and net profit.

The revenue in 2021 rose 28% to RM17.1 billion and saw a 49% rise in EBITDA to RM4.3 billion, while net income increased from 200milion to 2billion, a 10times increase. The strong performance for the full year 2021 was achieved on the back of a recovery in patient footfall, better operational efficiencies and delivery of COVID-19 related services across its hospital network. In particular, Turkey and Europe via Acibadem, continued to outperform as the operations were able to manage the challenges arising from the pandemic. The business continued to gain market share as it saw increased volume from local patients and the return of foreign patients since Turkey started to ease border restrictions since second half of 2020. As Acibadem expanded its operations into Europe such as Bulgaria,Macedonia, Serbia and the Netherlands, its European operations are now contributing about 28% of Acibadem’s revenue. Another reason is that as compared to 2020, the India and PPL Others segments turned from losses to profits.

 Even though the company ROE is single digit, I don’t think it is a bad quality company in 2021 and 2022. The ROIC is double digit in these both years. I believe that one of the reasons that the company has got single digit ROE throughout the years in 2021 and 2022 because the company has got high goodwill in consolidation with 13billion in 2022 and 12billion in 2021 respectively, the company is aggressively acquiring other companies, hence high goodwill. 

However, the company PE ratio is about 30 at the price of 5.75, with a dividend yield of around 1 percent, and we can certainly expect the growth is there since the Group achieving organic growth, acquiring strategic assets, developing laboratory business, and driving innovation and digital transformation. Do you think that the company is expensive at the PE ratio of 30 given the growth opportunities?

Disclaimer: This information is intended for educational purposes only. It shall not be understood or construed as, financial advice. It is very important to do your own analysis before making any decision

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Raymond Lim, CFA


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