IHH Healthcare Shares Climb On RM3.92 Bln Island Hospital Acquisition

KUALA LUMPUR, Sept 5 (Bernama) -- IHH Healthcare Bhd's shares rose following its indirect wholly-owned subsidiary, Pantai Holdings Sdn Bhd, signing a sale and purchase agreement to acquire the 600-bed Island Hospital for RM3.92 billion.

As of 9.40 am, the stock was up four sen to RM6.43, with 462,900 shares traded.

RHB Investment Bank Bhd views the acquisition favourably, citing Island Hospital Penang’s high-margin profile, strong growth potential, and synergies that will enhance IHH Penang’s operations.

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The acquisition, expected to conclude in 2024, marks IHH’s second major transaction in Malaysia after purchasing Timberland Medical Centre in August 2023.

“If funded 80 per cent by debt and 20 per cent by cash (to be completed by November), we estimate potential earnings accretion of two per cent in 2024 and nine per cent in 2025.

“This could result in a sum-of-the-parts target price of RM8.20," RHB said in a note.

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Public Investment Bank Bhd echoed the positive sentiment, stating that the acquisition would bolster IHH’s presence in Penang and strategically position the group to tap into the region’s booming medical tourism market, particularly from Indonesia.

“We are positive about IHH’s move, as it will strengthen the group’s competitive position by creating synergies with its existing facilities—Gleneagles Hospital Penang and Pantai Hospital Penang—expanding its network to 1,000 operational beds in the state,” the investment bank said.

However, the bank warned that preliminary estimates suggest FY25-FY26 earnings could decline by more than five per cent due to the additional interest costs incurred.

“At this juncture, we maintain our forecast pending the acquisition’s completion,” the bank added, reiterating an outperform rating on IHH with an unchanged target price of RM7.68.

-- BERNAMA