| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM10.30 (+12.9%) |
| Last Traded | RM9.12 |
| Recommendation |
IHH Healthcare Berhad reported a core net profit of RM1.8 billion for FY25, which met the investment bank’s expectations but fell below consensus estimates, reaching 99.0% of its full-year forecast and 92.4% of consensus projections, respectively. The company’s core profit demonstrated robust year-on-year growth of 7.9%, while revenue expanded by 5.6% to RM25.7 billion.
In recognition of its performance, the board declared a final dividend of 5.5 sen per share, bringing the total dividend for FY25 to 10.5 sen, an increase from 10.0 sen in FY24.
Regional Performance Highlights
The stronger financial performance was predominantly propelled by significant contributions from its operations in Malaysia, India, and Türkiye & Europe. In Malaysia, IHH Healthcare Berhad’s EBITDA surged by 21% to RM1.3 billion. This growth was underpinned by strategic factors including the acquisition of Island Hospital, a notable increase in revenue intensity, and a 3% rise in inpatient admissions.
Similarly, India’s operations saw a 7% year-on-year increase in EBITDA, driven by higher inpatient admissions and improved revenue per inpatient rates of 8% and 6%, respectively. The Türkiye & Europe segment also recorded a commendable 14% rise in FY25 EBITDA, attributed to price increases, enhanced revenue intensity from a more acute patient mix, and increased foreign patient revenue.
However, performance in Singapore remained subdued, with FY25 EBITDA declining by 9% to RM1.7 billion. This was primarily due to ongoing renovation works at Mount Elizabeth Orchard and pressure from payors, which impacted operations.
Outlook and Analyst Adjustments
Looking ahead, IHH Healthcare Berhad anticipates that EBITDA margins in Malaysia will remain resilient at approximately 28%. This stability is expected to be supported by ongoing efforts to mitigate medical inflation through procurement optimisation, higher patient volumes, and improved manpower cost efficiencies. Day care volumes are also projected to continue their upward trend.
In Singapore, the recent reopening of Mount Elizabeth Orchard is expected to provide a clearer path for earnings recovery in the coming quarters, with operations anticipated to stabilise by the second half of 2026. However, the strengthening of the Ringgit could potentially weigh on IHH’s earnings due to its impact on profits from overseas operations, given that Malaysia accounts for approximately 19% of the group’s revenue, followed by Singapore (24%), India (17%), Greater China (6%), and Türkiye & Europe (34%).
Following the FY25 results, TA SECURITIES has adjusted its earnings estimates for FY26 and FY27 downward by 0.9% and 1.7%, respectively. Despite these revisions, the investment bank maintains its BUY recommendation on IHH Healthcare Berhad, raising its target price to RM10.30 per share from the previous RM9.67, based on a Sum-of-the-Parts (SOTP) valuation.
