IHH Healthcare expected to maintain robust performance, analysts retain 'buy' call

KUALA LUMPUR, Nov 30 -- IHH Healthcare Bhd (IHH), which yesterday announced a 77.4 per cent surge in earnings year-on-year to RM550 million for its third financial quarter, is expected to remain robust in its performance for the remainder of the year, according to MIDF Research.

The research house maintained its “buy” call with a higher target price (TP) of RM7.25 per share (up from RM6.35), saying the positive view was based on IHH’s strategic business locations that could be used to mitigate in the cases of another lockdown, robust balance sheet, and continuous support for COVID-19 related services. 

“IHH had been in recovery in patient volumes since financial year 2020 (FY20) from major lockdowns, by mitigating to other operations which included COVID-19-related services in terms of screening, lab testing and vaccinations.

“This is further proof of IHH’s resiliency in the uncertainty of the ongoing pandemic and economic recovery,” said MIDF Research.

Meanwhile, RHB Investment said IHH’s earnings of RM1.41 billion for the first nine months of FY21 fell below estimates due to a worse-than-expected performance from its Singapore facilities. 

"While numbers softened quarter-on-quarter, we believe its operations excluding (Turkey-based) Acibadem remain well on track for a recovery in FY22, once country borders reopen and patients regaining confidence about visiting the hospital. 

"We make no changes to our forecasts. Our forecast did not include the impact of the Prosperity Tax as we wait further clarity from the group’s results briefing,” it said.

RHB Investment maintained a “buy” for the stock and a sum-of-parts TP of RM7.20.

Another research firm, CGS-CIMB Securities, said IHH achieved a return of equity of 8.2 per cent in the third quarter of 2021 while Gleneagles Hong Kong continued to report positive earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the quarter. 

It said the healthcare business was hedged in both ways -- higher COVID-19-related revenue when cases rise and return of foreign patients as situation return to normalcy. 

"We expect higher operating leverage on better economies of scales. We keep our FY21-22 forecast earnings per share unchanged pending the company’s briefing," it said. 

It also gave an “add” rating with an increase in TP to RM8.21 per share from RM6.60 previously. 

At lunch break, IHH's share price fell two sen to RM6.58 with 5.38 million shares transacted.

-- BERNAMA