2Q22 (ex-MFRS 129) saw strong rebound in IHH Healthcare (SGX:Q0F)'s normal business post reopening, offsetting a significant decline in COVID-19 related services, thus sustaining revenue at high levels. Malaysia saw strong recovery while Turkey saw decline in margins.
Key highlights on IHH Healthcare operations
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All markets recorded strong revenue intensity except Malaysia and India. All key markets saw a higher revenue intensity, particularly from Singapore (+23% y-o-y) and Turkey (+16% y-o-y, partly from price increase for inflation) while India and Malaysia saw decline by 15% y-o-y and 7% y-o-y respectively.
Gleneagles HK contributed a RM5m EBITDA despite the lockdown in 2Q22; progressively opening beds to 300 by year-end. Despite the outbreak of COVID-19 in Hong Kong during 1H22, Gleneagles HK contributed a RM5m EBITDA in 2Q22 vs RM0.1m in 1Q22 and RM2.4m in 4Q21. The ramp-up of the hospital has been progressing well and management will likely open beds to 300 by year-end (from ~200 currently).
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IHH laboratories’ business normalised with the tapering of COVID-19 testing; revenue was ~31% higher than pre-COVID levels but EBITDA margins fell. IHH Laboratories saw businesses normalise with the decline in COVID testing. While 2Q22 revenue is higher by ~31% vs the pre-COVID level, EBITDA margins fell to 19% vs 25% pre-COVID.
Medical tourism has returned and should help offset the tapering off COVID-19 related services; we expect this trend could remain strong in the near-term due to pent-up demand
IHH Healthcare has entered into a definitive agreement for the sale of IMU in Jun’22 for a total enterprise value of RM1.35bn.
IHH Healthcare continues to expand in Turkey with the purchase of Orthopedia Hospital in Adana on 9 Aug 2022.
Key takeaways from IHH Healthcare's analysts briefing.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
