IHH HEALTHCARE BERHAD (SGX:Q0F)
IHH Healthcare - A Commendable FY21
- IHH Healthcare (SGX:Q0F) ended FY21 on a strong note, with 4Q21 earnings up 33%, while full-year results exceeded our/consensus expectations by 7%. We believe the recovery of patient volumes should drive the growth ahead, notwithstanding the potential moderating of revenue intensity and COVID-19 related revenues.
- The recent weakness in IHH Healthcare's share price is unwarranted in our view, and at 31x FY22E P/E, the stock is trading at more than 1 standard deviation below its 5-year mean.
- Maintain BUY call on IHH Healthcare with a higher SOP-derived target price of RM7.60.
Ending on a strong note
- IHH Healthcare's 4Q21 core PATMI was up 33% y-o-y to RM441m, mainly on the back of
- higher patient volumes across most of its key markets,
- higher revenue intensity due to higher mix of complex cases, and
- sustained COVID-19 related revenues due to the Omicron wave.
- Full-year earnings were up 127% to RM1.58bn and were ahead of both our and consensus estimates by 7%. IHH Healthcare also declared a RM0.06 dividend for FY21 (33% payout of core PATMI).
Key operational metrics remained encouraging
- On a full-year basis, patient volumes grew by 18% for both India and Acibadem due to faster economic reopening. It was however flattish for Singapore and a slight decline of 4% for Malaysia. Nonetheless, revenue intensity grew by 8-21% across the key markets due to higher mix of complex cases, although we saw some tapering towards the 2H21 as patient mix began to normalise.
- COVID-19 related revenues remained a strong contributor at 6-29% of IHH Healthcare's 4Q21 revenues in the key markets. The consolidation of several hospitals also fuelled FY21 revenue growth, though the group incurred higher staff and COVID-19 related costs.
Volume recovery-led growth ahead
- We tweak our FY22-23E earnings forecast for IHH Healthcare higher by 2-3% to account for sustained elevated revenue intensity and COVID-19 related revenues, given the 2H21 metrics did not decline as badly as expected. We however impute a lower TRY/MYR average of 0.40 from 0.46 to reflect the weakening Lira. We also introduce FY24E estimates.
- Our bullish stance on the stock remains unchanged as IHH Healthcare should benefit from recovering patient volumes as international borders begin to reopen. Recent weakness in IHH Healthcare's share price is unwarranted in our view.
- See
- At 31x FY22E P/E, IHH Healthcare is trading at more than 1 standard deviation below its 5-year mean of 44x.
Shafiq Kadir
Maybank Research
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https://www.maybank-ke.com.sg/
2022-02-24
SGX Stock
Analyst Report
2.45
UP
2.430
