IHH Healthcare Berhad: Acibadem Acquired Bayindir to Expand Presence in Türkiye

(5225 | IHH MK) Healthcare | Healthcare Providers

DEVELOPMENT

• Türkiye’s Acibadem has agreed to buy an 80% stake in Bayindir Hospitals (Bayindir) from Is Bankasi for USD55m (approx. RM232.2m).
• The deal, which involves three Bayindir hospitals, values the company at USD80m, and upon acquisition, will increase the number of hospitals operated by Acibadem in Türkiye to 29.

OUR VIEW

• Medical tourism with affordable cost. Bayindir is a private healthcare operator with a strong presence in Ankara, Türkiye. Bayindir is accredited with Joint Commission International (JCI), indicating that its hospitals meet international standards for quality treatments. Bayindir also caters to international patients and provides services such as interpreter assistance, accommodation, and airport transfers. The group also offers special programmes like the B-Card International that offers discounts on various services to international patients. This suggests that Bayindir has a strong foothold on medical tourism, with affordable healthcare services.
• Aligns with IHH’s strategies. This acquisition aligns with Acibadem and IHH Healthcare’s (IHH) strategy to expand its footprint and strengthen its position in key markets. The move is also consistent with IHH’s broader cluster growth strategy for Türkiye and Central and Eastern Europe, in achieving greater economies of scale and become a more trusted healthcare network in the region.
• Positive for long-term earnings. Acibadem plans to renovate the Ankara hospitals both physically and technologically, which could lead to improved efficiency, increased inpatient and better case-mix. Over the medium to long term, this acquisition is expected to be earnings accretive to IHH.
• Downside risks on forex and valuation. We noted a few downside risks to this acquisition, namely: (i) financial investments on Bayindir (although it was stated the financing will be through equity and external sources), (ii) integration challenges to Acibadem’s existing operations and culture, and (iii) uncertainties on the valuation and possible expected returns (USD80m value vs USD55m acquisition). Another risk to consider is the weakened Turkish Lira against USD, which could impact negatively on operational cost and supply cost, although we noted that it may boost medical tourism demand for having cheaper treatments for international patients.
• All in all, we are positive on this development. The acquisition of Bayindir by Acibadem is a strategic and highly likely positive development for IHH in the long term, with the potential to boost revenue and profitability through quality care and medical tourism demand. We are also cautious on the downside risks, barring the positive offset of medical tourism to support the acquired hospitals.
• We make no changes to our earnings estimates for IHH at this juncture and maintain our BUY call for IHH with a target price of RM8.18.

INVESTMENT STATISTICS

Annual Standardized Year end 31 December

Source: Company, MBSBR

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This report has been prepared by MBSB INVESTMENT BANK BERHAD (formerly known as MIDF Amanah Investment Bank Berhad) 197501002077 (24878-X).

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