RESULTS UPDATE

Wednesday, August 30, 2023

FBMKLCI: 1,454.44
Sector: Healthcare

THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*

IHH Healthcare Berhad TP: RM6.30 (+4.9%)

Last Traded: RM6.00
HOLD (ESG: ★★★★)
Satisfactory Underlying Performance
Tan Kong Jin Tel: +603-2167 9729 [email protected] www.taonline.com.my

Review Share Information

 IHH Healthcare Berhad’s (IHH) 1H23 core net profit of RM644.9mn (- Bl oomberg Code IHH MK
Stock Code 5225
11.0% YoY) accounted for 42.1% and 38.4% of ours and consensus’ full- Li s ti ng Ma i n Ma rke t
year estimates. Notwithstanding, we deem the results as within Sha re Ca p (mn) 8,806.0
Ma rket Ca p (RMmn) 52,842.0
expectations as we expect 2H23 to be stronger due to increasing
52-wk Hi /Lo (RM) 6.275/5.351
occupancy rates and expansion plans. 12-mth Avg Da i l y Vol ('000 s hrs ) 4,703.6
Es ti ma te d Fre e Fl oa t (%) 25.1
 In 1H23, revenue rose 15.0% to RM9.8bn but core net profit declined Beta 0.7
11.0% to RM644.9mn mainly due to higher finance costs and MFRS 129 Major Shareholders (%)
Mi ts ui & Co Ltd - 32.8
related adjustments from the hyperinflationary economy in Turkey. Kha za na h Na s i ona l Bhd - 25.7
EPF - 10.4
 Operationally, Malaysia operations recorded a strong EBITDA growth of Mehme t Al i - 6.0
23% YoY in 1H23 as revenue per inpatient grew 2% while inpatient
Forecast Revision
admissions surged 27%. In Singapore, revenue and EBITDA increased by
FY23 FY24
12% and 4% as revenue per inpatient increased 13%. The satisfactory Foreca s t Re vi s i on (%) 0.0 0.0
performance was driven by more acute patients seeking treatment and Ne t profi t (RMmn) 1532.1 1647.2
Cons e ns us 1678.8 1869.6
price adjustments. TA's / Cons ens us (%) 91.3 88.1
Pre vi ous Ra ti ng Hol d (Ma i nta i ned)
 In India, revenue per inpatient surged 15% while inpatient admission Cons e ns us TP (RM) 7.11
increased 4% on the back of growth in domestic electives. As for
operations in Turkey and Europe, hospital inpatient admissions increased Financial Indicators
FY23 FY24
8% while its revenue per inpatient increased 43% due to the positive price Ne t ge a ri ng (x) 0.2 0.1
adjustments to counter inflation. CFPS (RM) 0.2 0.2
ROAA (%) 3.2 3.4
 QoQ, 2Q23 revenue and EBITDA declined by 9.1% and 12.6% to RM4.7bn ROAE (%) 5.8 6.1
NTA/Sha re (RM) 0.7 0.8
and RM1.0bn respectively. We attribute the weaker performance to: i) Pri ce / NTA (x) 8.7 7.9
lower sales, ii) higher cost of operations, and iii) higher debit adjustment
relating to the application of MFRS 129. Scorecard
% of FY
 The group declared an interim dividend of 3.5sen/share, bringing YTD vs . TA 42.1 Wi thi n
vs . Cons e ns us 38.4 Wi thi n
dividend to 13.1sen.
Share Performance (%)
Impact Price Change IHH FBM KLCI
 No change to our FY23-25 earnings projections, pending management 1 mth 1.9 0.3
3 mth 4.5 3.5
guidance at the results briefing today.
6 mth 5.4 0.0
12 mth (3.8) (3.1)
Outlook
 Going into 3Q23, we expect patient volumes to improve on the back of (12-Mth) Share Pricerelative to the FBMKLCI
pent-up demand for quality healthcare services and health tourism.
Expansion wise, the group targets to expand its bed capacity by 25% over
the next 3 years.

Valuation
 Maintain our Hold recommendation on the stock with an unchanged TP of
RM6.30/share based on SOTP valuation.

Source: Bloomberg

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Table 1: SOTP Valuation

Method Multiple Value (mn') Stake
Singapore EV/EBITDA 13.0 22,206.9 100%
Malaysia EV/EBITDA 13.0 11,341.3 100%
Turkey EV/EBITDA 11.0 13,610.6 90%
International EV/EBITDA 11.0 4,937.6 na
52,096.4

PLife REIT Consensus 3,343.2 36%

Total equity value 55,439.6

Shares outstanding (mn') 8,806.0

TP RM6.30

Table 2: Earnings Summary (RMmn)

FYE Dec (RM mn') FY21 FY22 FY23F FY24F FY25F
Revenue 17,131.8 17,988.7 20,357.0 21,957.9 23,146.0
EBITDA 4,544.1 4,513.1 4,771.3 5,102.0 5,302.4
Depreciation and amortisation (1,484.2) (1,790.8) (1,898.0) (1,928.7) (1,967.8)
EBIT 3,059.9 2,722.3 2,873.3 3,173.3 3,334.7
Associates & JV 39.9 38.9 40.8 42.9 45.0
PBT 2,555.7 2,217.1 2,192.4 2,582.4 2,750.5
Income tax expense (379.2) (571.9) (559.1) (722.8) (779.8)
MI (314.1) (96.7) (101.3) (212.3) (222.5)
Core net profit (-MI) 1,594.8 1,380.7 1,532.1 1,647.2 1,748.2

Core EPS (sen) 18.2 15.7 17.4 18.7 19.9

Core EPS growth (%) 122.9 (13.4) 11.0 7.5 6.1
DPS (sen) 6.0 7.0 15.5 6.8 6.9
Dividend yield (%) 1.0 1.2 2.6 1.1 1.2
Core PER (x) 33.0 38.3 34.5 32.1 30.2

Table 3: Operating Statistics

Inpatient traffic 1QFY22 4QFY22 1QFY23 QoQ YoY 1HFY22 1HFY23 YoY
- Singapore 15,693 15,564 15,133 (2.8) (3.6) 31,545 30,697 (2.7)
- Malaysia 49,138 58,939 56,767 (3.7) 15.5 90,809 115,706 27.4
- Turkey 59,252 65,570 60,333 (8.0) 1.8 116,795 125,903 7.8
- India 84,607 82,031 84,142 2.6 (0.5) 160,220 166,173 3.7

Revenue per inpatient (RM) % %

Singapore 52,004 55,636 57,723 3.8 11.0 50,001 56,680 13.4
Malaysia 9,588 9,690 10,007 3.3 4.4 9,684 9,849 1.7
Turkey 7,497 10,332 11,048 6.9 47.4 7,454 10,690 43.4
India 8,177 9,366 9,382 0.2 14.7 8,159 9,374 14.9

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Table 4: 1HFY23 Results Analysis (RMmn)
FYE Dec (RM mn') 2QFY22 1QFY23 2QFY23 QoQ YoY 1HFY22 1HFY23 YoY
% % %
Revenue 4,373.6 5,142.4 4,673.9 (9.1) 6.9 8,536.6 9,816.3 15.0
- Parkway Pantai 3,524.8 3,306.3 3,426.8 3.6 (2.8) 6,257.6 6,733.2 7.6
- Acibadem Holdings 1,055.0 1,500.4 980.3 (34.7) (7.1) 2,061.9 2,480.7 20.3
- Plife REIT 36.7 39.0 39.0 (0.1) 6.2 76.2 78.0 2.4
- Others 1.2 1.4 1.3 (8.5) 8.4 2.4 2.7 16.0
EBITDA 979.0 1,149.5 1,004.4 (12.6) 2.6 1,975.4 2,153.8 9.0
- Parkway Pantai 866.4 771.5 773.6 0.3 (10.7) 1,481.6 1,545.2 4.3
- Acibadem Holdings 195.5 302.8 163.9 (45.9) (16.2) 453.3 466.7 2.9
- Plife REIT 71.8 78.6 78.9 0.5 10.0 144.6 157.5 9.0
Depreciation (369.3) (358.3) (326.5) (8.9) (11.6) (669.0) (684.8) 2.4
Amortisation (13.0) (11.1) (11.1) (0.3) (14.5) (23.2) (22.2) (4.2)
Forex 24.3 5.3 6.9 29.5 (71.7) 22.4 12.2 (45.5)
Finance income 125.6 39.6 182.8 361.7 45.5 175.8 222.4 26.5
Finance costs (185.2) (185.2) (385.5) 108.1 108.2 (311.7) (570.7) 83.1
Monetary gain 295.5 164.8 41.0 (75.1) (86.1) 295.5 205.8 (30.4)
Associates 11.1 6.1 5.1 (15.9) (53.5) 18.9 11.3 (40.5)
JV 0.7 0.5 0.2 (68.7) (76.5) 1.2 0.7 (46.8)
Others 9.9 981.4 24.8 (97.5) 150.9 14.3 1,006.2 6,944.8
PBT 878.5 1,792.5 542.0 (69.8) (38.3) 1,499.7 2,334.5 55.7
Tax (144.1) (240.5) (157.1) (34.7) 9.0 (195.2) (397.6) 103.7
MI (122.3) (161.4) (83.1) (48.5) (32.0) (199.1) (244.5) 22.8
Net profit 612.1 1,390.5 301.8 (78.3) (50.7) 1,105.4 1,692.4 53.1
Core net profit 317.5 329.9 315.0 (4.5) (0.8) 724.9 644.9 (11.0)
EPS, excluding EI (sen) 3.3 3.8 3.6 (4.5) 7.2 7.7 7.3 (5.2)
DPS (sen) 0.0 9.6 3.5 (63.5) nm 0.0 13.1 nm

Profitability ratios % % % pp pp % % pp
EBITDA margin 22.4 22.4 21.5 (0.9) (0.9) 23.1 21.9 (1.2)
- Parkway Pantai 24.6 23.3 22.6 (0.8) (2.0) 23.7 22.9 (0.7)
- Acibadem Holdings 18.5 20.2 16.7 (3.5) (1.8) 22.0 18.8 (3.2)
- Plife REIT 195.5 201.3 202.4 1.1 7.0 189.8 201.9 12.1
PBT margin 20.1 34.9 11.6 (23.3) (8.5) 17.6 23.8 6.2
Tax rate 16.4 13.4 29.0 15.6 12.6 13.0 17.0 4.0
Core net profit 7.3 6.4 6.7 0.3 (0.5) 8.5 6.6 (1.9)

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( T HI S P A GE IS IN T E N T I O N AL L Y L E F T BL A N K )

Stock Recommendation Guideline

BUY : Total return within the next 12 months exceeds required rate of return by 5%-point.
HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point.
SELL : Total return is lower than the required rate of return.
Not Rated: The company is not under coverage. The report is for information only.
Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return
if dividend discount model valuation is used to avoid double counting.
Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.

ESG Scoring &Guideline

Environmental Social Governance Average
Scoring    
Establish measures to ensure High standards of conduct and Good governance practices and
sustainable energy consumption, conducive working environment. guidelines in its business conduct.
proper waste management practices
Remark
and resource conservation without
compromising on patient safety
and well-being.
★★★★★ (≥80%) : Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future
directions.
★★★★ (60-79%) :Above adequate integration of ESG factors into most aspects of operations, management and future directions.
★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions.
★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient.
★ (<20%) : Minimal or no integration of ESG factors in operations and management.
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without
notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document.
We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.

As of Wednesday, August 30, 2023, the analyst, Tan Kong Jin, who prepared this report, has interest in the following securities covered in this report:
(a) nil

Kaladher Govindan – Head of Research

TA SECURITIES HOLDINGS BERHAD 197301001467 (14948-M)

A Participating Organisation of Bursa Malaysia Securities Berhad

Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048
www.ta.com.my

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