Research Firms Upbeat About IHH
KUALA LUMPUR, Nov 29 (Bernama) -- RHB Investment Bank Bhd (RHBIB) remains upbeat about IHH Healthcare Bhd’s strategic plan for both organic and inorganic growth over the mid-to-long term.
The group’s targeted expansion of 4,000 beds by 2028 primarily in Malaysia and India is an opportunity to tap into regions where quality healthcare is scarce, it said.
"We maintain our positive view on IHH’s long-term prospects as we like the group’s solid execution strategy, reputable regional footprint across key regions driven by its strong brand awareness, inelastic demand and its affluent clientele focus which should provide earnings resiliency," RHBIB said in a research note today.
RHBIB has maintained a “Buy” on the stock with a higher target price (TP) of RM9.10 from RM8.80 previously.
Key downside risks to its call include lower-than-expected patient volume and revenue intensity, unfavourable regulatory measures, and higher-than-expected operating costs.
Similarly, Kenanga Investment Bank Bhd also continues to like IHH for its pricing power, as the inelastic demand for healthcare provides it with the ability to pass costs through amid rising inflation.
It also likes the strong recovery in patient throughput, from both domestic and international markets, and its commanding market position in the private healthcare space with a presence in Malaysia, Singapore, Türkiye and Greater China.
It expects a revenue per inpatient growth of 12-16 per cent in 2024 versus an estimated 19 per cent in 2023 due to a low base effect in 2022 and a bed occupancy rate (BOR) of 65-73 per cent against a 65 per cent average in 2023 for its hospitals in Malaysia, Singapore, India and Türkiye.
"The key growth factor for its inpatient throughput and BOR will be revenue intensity from a case mix with more acute cases and medical tourists and the addition of new beds," said Kenanga.
The research firm also reiterated its “Outperform” call and raised its TP to RM8.11 from RM7.73 previously.
Key risks to its call include regulatory risk, risks associated with overseas operations, and the lack of political will to roll out a national health insurance scheme.
Another research firm, CIMB Securities Sdn Bhd also kept its “Buy” recommendation with an unchanged TP of RM8.50.
It also expects financial years 2023-2026 forecast earnings outlook to remain largely intact, driven by its brownfield-focus bed expansion, and strong operating performance.
Downside risks to its recommendation include slow margin improvement from India, country risks from Türkiye operations, and higher-than-expected losses from its hospital in China.
As at 11.35 am, IHH’s share price rose 2.0 sen to RM7.25 with 1.83 million shares traded.
-- BERNAMA
