IHH’s 1HFY13 core earnings of MYR322.1m were within both consensus and  our  estimates,  making  up  46.9%  and  50.3%  of  the  respective  full-year  forecasts.  In  2QFY13,  Mount  Elizabeth  Novena  and  Acibadem Ankara  hospitals  achieved  positive  EBITDA  while  the  losses  at Acibadem  Bodrum  Hospital  fell  significantly.  No  changes  to  our estimates  at  this  juncture.  Maintain  NEUTRAL,  with  our  SOP-based  FV unchanged at MYR3.87.

- Numbers  largely  in  line.  IHH  clocked  in  1HFY13  revenue  of MYR3.30bn, up by an adjusted 20.6% y-o-y (after stripping off the sale of medical  suites  amounting  to  MYR1.21bn  in  1HFY12)  on  improved contribution  from  all  its  existing  operations  in  Malaysia,  Singapore  and Turkey.  Correspondingly,  core  EBITDA  expanded  20.9%  y-o-y  to MYR813.8m  as  margins  improved  on  lower  losses  from  its  Mount Elizabeth  Novena  Hospital,  which  posted  an  EBITDA  loss  of  MYR0.4m vis-à-vis  MYR43.8m  in  1HFY12.  All  in,  the  group’s  1HFY13  core earnings  rose  38.7%  y-o-y  to  MYR322.1m,  boosted  by  a  one-off MYR22.0m  tax  credit  recognized  in  2QFY13.  On  a  quarterly  basis,  the 2QFY13 numbers improved y-o-y and q-o-q, with revenue of MYR1.68bn and  core  earnings  of  MYR188.7m  as  the  group’s  Mount  Elizabeth Novena and Acibadem Ankara hospitals achieved positive EBITDA.  

- Other highlights. In 1HFY13, the number of inpatients at the Singapore and Malaysia hospitals rose 7.7% and 4.1% respectively to 29k and 83k while  revenue  per  patient  inched  up  3.6%  to  MYR21k  and  6.9%  to MYR4k  respectively.  Meanwhile,  Acibadem’s  hospitals  in  Turkey registered  a  healthy  7.0%  growth  in  inpatient  admissions  to  61k  in 1HFY13 following the opening of its Bodrum and Ankara hospitals, while average revenue per inpatient admission was largely stable at MYR10k.

- Maintain  NEUTRAL.  With  the  results  largely  in  line,  we  make  no changes  to  our  earnings  estimates.  Hence,  we  are  maintaining  our NEUTRAL  call  given  the stock’s relatively  unappealing  valuation,  with our  SOP-based  FV  unchanged  at  MYR3.87.  Based  on  its  last  closing price,  the  stock  is  trading  at  a  demanding  39.8x  FY14  P/E  vis-à-vis  its regional healthcare peers’ 23.4x-27.6x.

Source: RHB