• Maintain BUY (TP: RM7.37). IHH’s 1HFY24 top-line improved by +22.7% YoY to RM12,048mn driven by consistent growth in patient volume and an increase in handling more acute and complex cases across all markets. The better performance was supported by strong revenue growth from across key markets (Singapore: +17% YoY, Malaysia: +12% YoY, India: +19% YoY, Greater China: +23% YoY, Turkiye & Europe: +22% YoY). In tandem, IHH recorded higher 1HFY24 core net profit of RM840mn (+30.3% YoY) which was in-line with our and consensus expectations, accounting for 53.4% and 45.6% respectively. Maintain a BUY call with a higher TP of RM7.37 (from RM7.17) as we are taking this opportunity to roll-forward our valuation base year to FY25. Our valuation is derived based on SOP valuation with a WACC of 7% for Parkway Pantai Limited, 11% for Acibadem.

• Key highlights. Zooming on the hospital and healthcare segment, revenue increased by 18% YoY to RM11,372mn in 6MFY24. This growth was driven by sustained demand for quality healthcare services, a case mix of more acute patients, and price adjustments to counter inflation. At the EBITDA level, all major operations showed improvement. On a quarterly basis, topline and bottom-line improved by 30.4% YoY and 38.8% YoY respectively in 2QFY24. This improvement was driven by better performance across the segments, namely hospital & healthcare (+18% YoY) and labs (+8% YoY).

• Earnings Revision. No changes to our forecast.

• Outlook. We maintain a positive outlook on IHH, as we foresee continued demand growth driven by increasing patient throughput and higher returns from a case-mix that includes more acute cases and IHH’s robust organic growth. We believe IHH’s pricing power remains strong, as the inelastic demand for healthcare allows the company to pass on costs despite rising inflation. It is worth to note that, in its Malaysia operations, the group is expanding Gleneagles Kuala Lumpur (GKL) to become one of the largest private hospitals in the country by 2027, with a capacity of over 700 beds. The new medical block will add 260 beds, focusing on a high number of single rooms to cater to the growing demand for individualized patient care.

Source: BIMB Securities Research - 30 Aug 2024