IHH Healthcare also has operations in Turkey.
KUALA LUMPUR: PublicInvest Research is retaining its Neutral call on IHH Healthcare due to the hospital operator’s hefty valuations, with target price unchanged at RM6.39.
It said on Tuesday despite IHH’s growth trajectory, its expensive valuations (trading at 51.6 times forward FY16 PE) prompts it to retain its Neutral call on IHH.
IHH announced its first venture into Myanmar, highlighting the country as a new market to expand its footprints. The US$70mil (RM300mil) greenfield project will see a new 250-bed hospital, Parkway Yangon being built in Yangon.
The project is a joint venture, and IHH holds a 52% stake via its unit Parkway Healthcare Indo China.
“We are positive on the venture, as we acknowledge management’s continuous efforts in strengthening its foothold in the Southeast Asia region.
“We continue to like IHH for its aggressive expansion and promising ongoing projects, such as Gleneagles Hong Kong, which we expect to make maiden earnings contribution in 2017,” it said.
Parkway Yangon is targeted to open in 2020. Located at downtown Yangon, the hospital is on a 1.7ha land leased for 50 years with the option of two 10-year extensions.
“We are upbeat on IHH’s global projects, including Gleneagles Hong Kong and ParkwayHealth Chengdu Hospital, which we expect to contribute steadily to the Group’s earnings as they come aboard in 2017.
“Income stream from Global Hospitals and Continental Hospitals would be much more significant as beds are ramped up and occupancy rates improved,” it said.
PublicInvest Research said on domestic front, the recently opened Gleneagles Medini is likely to see upcoming inflow of Singapore patients, as it is now Medisave accredited.
“Although we expect in-patient volume growth to be rather flattish for the year, we should still see upbeat growth in revenue intensity. Operations in its key markets, Malaysia, Singapore and Turkey remain steady,” it said.
PublicInvest Research said Turkey’s outlook is steady despite ongoing uncertainties in its political setting. Medical tourism, which accounts for 10% of Acibadem’s overall revenue stream, is likely to be more affected as compared to domestic consumption, but overall operations is expected to be stable on increasing domestic demand, partially due to influx of refugees into Turkey.
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