Review

• IHH Healthcare Berhad’s (IHH) 1H24 core net profit of RM840.0mn was in line with expectations at 55.7% of our full-year forecast and 45.6% of consensus earnings.

• QoQ, 2Q24 PBT decreased by 3.2% to RM900mn despite higher revenue of 2.3% at RM6.1bn. This was mainly due to the weaker performance in Turkiye and Europe operations.

• 1H24 EBITDA increased 26.1% YoY to RM2.7bn in tandem with revenue growth of 22.7% to RM12.1bn, driven by sustained improvement in revenue intensity and patient volumes across all markets. All core markets posted double digits revenue growth.

• Singapore operations EBITDA rose 22% to RM786mn in 1H24, due to higher revenue intensity from improving case mix and bed occupancy. Singapore’s hospital inpatient volumes grew 2% while its revenue per inpatient improved by 16.9%. In Malaysia, revenue and EBITDA increased by 12% and 5% respectively on the back of higher patient admission and higher revenue intensity from complex treatments.

• Over to Turkiye and Europe, hospital inpatient volumes grew 2.5% while its revenue per inpatient surged 50.5% due to the price adjustments to counter hyperinflation. As for India, hospital inpatient admissions increased 2.8% to 150,094 while its revenue per inpatient admission increased 9.6% to RM10,627.

Impact

• No change to our earnings estimates, pending results briefing today.

Outlook

• Backed by the increasing demand for quality healthcare, IHH targets to add close to 4,000 new beds (+33%) over the next 5 years. In addition, the group would continue to solidify its position as Asia’s leading cancer care provider, with FMRI the first in South Asia to offer groundbreaking Gamma Knife Esprit treatment for brain tumours

Valuation

• Reiterate our Hold recommendation on the stock with a TP of RM6.85/share based on SOTP valuation.

Source: TA Research - 30 Aug 2024