BERHAD: Healthcare Provider Reports Robust Earnings, Outperforms Market Expectations

Public Investment Bank has reiterated its “Outperform” rating on a leading healthcare provider, citing strong financial performance in the fourth quarter of fiscal year 2025 (4QFY25) which surpassed market expectations. The investment bank has also raised its target price for the company to RM11.43, up from the previous RM8.79.

In 4QFY25, the healthcare provider reported a headline net profit of RM512 million, marking a substantial 61.5% year-on-year increase. After adjusting for MFRS 129 effects and other non-operating items, core net profit surged by 33.8% year-on-year to RM633 million. These results were in line with Public Investment Bank’s internal expectations but notably exceeded market forecasts, achieving 98% and 115% of full-year forecasts respectively.

The strong performance was primarily attributed to higher inpatient admissions, particularly in its Turkey and India operations, coupled with sustained demand for healthcare services. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), excluding MFRS 129, rose by 10% year-on-year to RM1.5 billion during the quarter. This robust EBITDA growth, however, was partially moderated by increased staff costs and other operating expenses.

Despite the positive profit figures, overall revenue experienced a marginal 2% year-on-year decline to RM6.6 billion. This dip was largely influenced by adverse foreign exchange translation effects stemming from the strengthening of the Ringgit. Additionally, lower inpatient admissions in Singapore and Malaysia, which saw decreases of 10% and 2% year-on-year respectively, also contributed to the revenue moderation. On a positive note, the company declared a final dividend of 5.5 sen per share, bringing the total dividend per share for FY25 to 10.50 sen (compared to 10.0 sen in FY24).

Future Outlook Remains Positive

Looking ahead to FY26F, Public Investment Bank maintains a positive outlook on the healthcare provider’s near-term growth prospects. This optimism is underpinned by strong earnings momentum, expected contributions from recent acquisitions, and ongoing portfolio expansion. The bank anticipates patient volumes to continue rising, driven by recent hospital upgrades and the expansion of ambulatory care and diagnostics services, which are set to further diversify revenue streams. While acknowledging potential headwinds such as persistent payor pressure, foreign exchange volatility, and medical inflation that could impact margins, the resilient demand for healthcare services, fuelled by a growing medical tourism market and favourable demographics, is expected to position the company for sustainable long-term growth.

The investment bank reiterates its “Outperform” call, reflecting confidence in the company’s sustained positive prospects and strategic positioning in the healthcare sector.