PETALING JAYA: Phillip Capital Research is upbeat on the outlook of IHH Healthcare Bhd
, which is supported by strong demand for elective surgeries, expectations of stronger inpatient volumes in the second half of the year (2H26) and ongoing digitalisation initiatives enhancing operational efficiency.
The research house reiterated a “buy” call on the healthcare group, with a higher target price of RM11.03, underpinned by expectations of stronger inpatient volumes and sustained demand for premium elective procedures.
It cautioned that the near-term, however, is softer, as it expects the first quarter of financial year 2026 (1Q26) core net profit to decline quarter-on-quarter, dragged by seasonal factors across Malaysia, Singapore, Turkiye and China.
In Singapore, Mount Elizabeth Hospital’s (MEH) bed occupancy rate dipped below 60% during the festive period before recovering to around 70% in April 2026.
Nevertheless, this weakness is viewed as temporary.
“Earnings are expected to strengthen in 2H26, supported by higher inpatient volumes, stronger elective demand, deferred procedures, and more favourable insurance utilisation trends,” it said.
A key earnings driver remains Singapore, which contributes about 35% of group earnings, supported by premium pricing and a high-margin mix of specialised services.
MEH, accounting for 42% of IHH’s Singapore bed capacity, is almost entirely elective-driven, allowing for better case planning, higher acuity procedures and stronger revenue intensity.
Notably, foreign patients, mainly from Asean and Indonesia, are skewed towards higher-value treatments, reinforcing margins.
Growth is also being supported by Project Renaissance, a S$350mil transformation initiative at MEH.
This includes expanding single-room capacity to meet rising demand for privacy and premium care, while maintaining a limited number of four-bed wards for price-sensitive patients.
The integration of the LizWorld digital platform is expected to enhance patient experience while improving operational efficiency through better resource utilisation and reduced nursing workload.
Similarly, an analyst told StarBiz that he remained bullish on the long-term outlook for IHH, bolstered by its ongoing bed capacity expansion plans and continued advancement in medical treatment offerings that will drive patient revenue intensity.
Looking ahead, Phillip Capital Research expects double-digit earnings growth of 14% to 17% over 2026 to 2028, driven by several structural tailwinds.
These include sustained growth in domestic and international patient volumes, resilient demand for elective procedures, and a continued recovery in medical tourism.
Revenue intensity is projected to rise across all key markets, led by Singapore, where earnings should recover as MEH returns to fuller utilisation.
Malaysia’s growth will be supported by the ramp-up of Island Hospital, while Turkiye, Europe and India benefit from a richer case mix and volume expansion.
However, it believed concerns over rising competition appear manageable.
The proposed not-for-profit hospital in Singapore is still at a preliminary stage, and its impact is expected to be limited if positioned in the mid-tier segment rather than premium care.
Valuation-wise, the target price is derived from a 17 times enterprise value to its earnings before interest, taxes, depreciation and amortisation multiple, with the group’s growth outlook anchored on ongoing capacity expansion and resilient healthcare demand.
Key risks flagged include regulatory changes, weaker-than-expected patient volumes, rising operating costs, currency fluctuations affecting medical tourism, and intensifying competition within the private healthcare space.
