Exposure to a network of healthcare jewels with commanding market positions. IHH offers investors exposure to a network of healthcare jewels with commanding market positions. In Singapore, IHH via Parkway is the largest private healthcare provider with a market share of approximately 43.9%.  In Malaysia, through the Pantai and Gleneagles brands, it is the second largest private healthcare provider in the country in terms of the number of licensed beds, with a market share of approximately 15.1%.

Solid captive markets in growth locations.  In Turkey, its Acibadem. Strategically located between Europe, Asia and the Middle East, Turkey has emerged as one of the most popular destinations for medical travels in the CEEMENA region (Central & Eastern Europe, the Balkans, Turkey, the Middle East and North Africa), with an estimated 125,000 medical travellers in 2011. IHH's Acibadem hospital network is the largest private healthcare provider there with a 5.2% market share and caters to over 19,000 foreign patients in 2011.

Strong recognisable brands with a reputation for clinical excellence. IHH's key hospitals are recognised for regularly performing complex and high intensity clinical procedures requiring highly experienced surgeons and advanced facilities, adopting global best practices and achieving outstanding patient outcomes. The standard of its healthcare services has been acknowledged via renowned international and regional quality accreditation.

Expansion program to drive growth. IHH is embarking on an expansion plan to drive growth over the next few years. IHH's pipeline will deliver over 3,300 new beds through new hospital developments and the expansion of its existing facilities over the next five years, which includes two potential hospital development projects in Turkey, of which negotiations are ongoing. These new beds also include approximately 760 new beds in facilities that IHH expects to manage through hospital management agreements over the next five years.

Initiating coverage on IHH with a MARKET PERFORM recommendation. Given the highly defensive and captive earnings streams in the healthcare services, we are using the EV/EBITDA valuation methodology in our sum-of-parts valuation.  We are  initiating coverage on IHH with a MARKET PERFORM recommendation and TP of RM3.51 based on a sum-of-parts valuation. Despite the scarcity premium that we have attached to IHH units given its sheer size, commanding market position and superior growth potential, IHH is currently trading close to our target price.       

Source: Kenanga