PETALING JAYA: IHH Healthcare Bhd could be impacted by the Covid-19 outbreak that has spread around the globe currently.
According to Public Research, IHH’s hospitals might see lower foreign patient volume until the virus is effectively contained.
“Foreign patients with non-urgent medical conditions are less likely to travel for treatment and might delay treatment, ” it said.
UOBKayHian Research (UOBKH) said that it is trimming its 2020 and 2021 earnings estimates for the hospital group by 8% and 10% respectively to factor in the covid-19 outbreak impacting medical tourism, and adjust its margin assumptions.
“Over the near term, the covid-19 outbreak headwinds could weigh on operations, extending gestation of Gleneagles Hong Kong and Gleneagles Chengdu with potential broader implications across its whole operations, ” UOBKH said.
Meanwhile, Public Research said that construction works for Gleneagles Shanghai has been stopped by the local authorities, to stop the spread of covid-19.
“The stoppage might impact the scheduled construction completion and hospital opening, depending when the construction work can resume, ” it said.
Commenting on its latest fourth quarter results UOBKH said, IHH’s 4Q earnings of RM290mil which is lower by some 15% year-on-year brought 2019 core earnings to RM921mil.
“This was largely within our and consensus expectations, accounting for 97% and 101% of ours and consensus forecasts. Despite revenue being aided by its Fortis acquisition
and growth across all markets, full-year earnings contracted off higher interest expense and depreciation, ” it said.
UOBKH maintained its buy rating on IHH with a sum of parts-based target price of RM5.86 from RM5.93 previously in tandem with its lowered earnings.
“The target price implies a 48.6 times 2020 forecast price to earnings ratio (PER), below its historical 5-year, 12-month forward PE of 57 times, ” it said.
The research house further said that IHH’s valuations appear decent with its resilient yetdefensive three-year earnings (2019-2022 forecast) compounded annual growth rate of 14.9% and its sound track record.
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