IHH: Healthcare Provider Poised for Strong Growth on Expansion and Efficiency

A leading healthcare group is set for substantial growth, driven by strategic capacity expansion, robust patient demand, and significant operational efficiencies, according to a recent investment bank research report. The group, which operates over 80 hospitals across 10 countries, is projected to achieve a 9% compound annual growth rate (CAGR) in revenue and a 13% CAGR in core profit over the 2024-2027 period.

This positive outlook is underpinned by the defensive nature of the private healthcare sector, which consistently demonstrates resilience even amidst macroeconomic headwinds. Demand for essential and non-deferrable treatments, particularly in high-acuity areas like oncology and cardiology, remains strong. The group’s diversified patient base, including a growing segment of international patients, further buffers against domestic economic fluctuations, reinforcing long-term earnings visibility.

Strategic Expansion and Market Performance

The group has outlined an ambitious expansion roadmap, planning to add over 4,000 new beds by 2028, representing a 33% increase in inpatient capacity. This growth will span key markets including Malaysia, India, China, Turkiye, and Europe, through a mix of new hospital developments, facility upgrades, and expansions. Notably, the risk of oversupply is deemed minimal, as hospital bed density in most of its core markets remains below the OECD average.

Regionally, operations continue to demonstrate strong performance. Malaysia’s operations saw an 18% increase in overall revenue in 3Q25, with a projected 14% revenue CAGR from 2022-2027. Singapore recorded a 4% year-on-year increase in revenue intensity in 3Q25, and stronger performance is anticipated from 2026 as newly reopened facilities reach full operational capacity. Turkiye & Europe posted a 19% year-on-year revenue growth in 3Q25, while India’s operations grew by 5% year-on-year in the same period. China’s operations achieved a 7% year-on-year revenue growth in 3Q25, with management aiming for breakeven by the end of 2025.

Operational Excellence and Future Drivers

Significant cost efficiencies and operational leverage are expected to be key drivers of future profitability. The group’s extensive hospital network facilitates cost synergies through centralised procurement of consumables and medical equipment. The adoption of an AI-powered Operations Command Centre (OCC) is also enhancing efficiency by enabling real-time monitoring and predictive resource planning, optimising hospital stays and improving patient experience.

Medical tourism is identified as a crucial growth segment, with Malaysia’s medical tourism revenue exhibiting a 10% CAGR from 2019-2024. Strategic acquisitions, such as a major hospital in Penang, are expected to bolster the group’s leadership in this lucrative market, anticipating substantial synergies from operational efficiencies and network integration.

Potential Challenges and Mitigating Factors

While the outlook is overwhelmingly positive, the report acknowledges potential challenges, including currency fluctuations, regulatory changes (such as Malaysia’s planned DRG payment system), higher operating costs, and competition. However, these risks are expected to be manageable due to the group’s robust market position, diversified revenue streams, and proactive cost management strategies. The anticipated impact of the DRG system, for instance, is limited as the initial phase targets lower-value cases, and the group maintains a significant market share in Malaysia.

The investment bank initiates coverage with a BUY recommendation, citing strong earnings visibility and structural growth prospects that justify its valuation premium compared to regional peers. The group’s commitment to strategic expansion, technological adoption, and operational efficiency positions it well to capture the growing demand for private healthcare services across its key markets.