PETALING JAYA: IHH Healthcare Bhd
’s prospects remain strong and could even improve further following stellar results for last year.
Analysts are anticipating further organic growth, coupled with any acquisitions which would help bolster its growth potential.
The group plans to increase bed capacity by more than 30% or 4,000 beds over the next five-years across Malaysia, India, Turkiye and Europe.
The capacity expansion will also encompass facelifts and renovations to existing facilities, building of extensions, new construction and relocating some of its complementary ancillary services to alternative sites near its hospitals.
Management indicated that it will continue to seek earnings-accretive corporate opportunities in Asia and Europe and improve its return on equity.
Kenanga Research expects IHH’s growth for revenue per inpatient at 12%-16% compared with an estimated 19% in 2023 due to the low-base effect from 2022.
It also sees inpatient throughput growth at 9%-12% compared to an estimated 7% in 2023 and bed occupancy rate (BOR) of 65%-73% compared to an estimated averaging 65% in 2023 for its hospitals in Malaysia, Singapore, India and Turkiye.
“We believe the key growth factor for its inpatient throughput and BOR would be revenue intensity from a case-mix with more acute cases and medical tourists, the addition of new beds, previously constrained by staff shortages that are gradually easing.
“We expect sustained performance in Malaysia, while staff shortages in Singapore have been resolved,” Kenanga Research said, leaving its “outperform” call on the company and RM7 target price unchanged.
The research house also noted the return of Middle Eastern and Central Asian medical tourists to its hospitals in Turkiye and India, adding that the group’s management had also guided in its brief for capital expenditures of RM2.7bil-RM2.8bil, to prioritise hospitals that are currently operating at 70%-75% levels to avoid losing patients.
TA Research said it expects IHH’s earnings before interest, taxes, depreciation and amortisation margins to hover at the 22%-24% levels in financial year 2024 (FY24) to FY26.
The group had also said it will maintain a tight rein on cost and leverage operational synergies to mitigate inflationary and staff costs pressures.
IHH’s net profit for the financial year ended Dec 31, 2023 jumped to RM2.95bil versus RM1.55bil chalked up a year ago.
Revenue for the year under review soared to RM20.93bil against RM17.99bil.
For the fourth quarter ended Dec 31, 2023, IHH’s net profit rose to RM727.45mil from RM191.27mil, while revenue was RM5.29bil compared with RM4.86bil for the corresponding quarter in financial year 2022.
IHH declared a second and final cash dividend of 5.5 sen per share to be paid on April 26, 2024.
