IHH Healthcare - DBS Research 2023-03-02: Stronger Comeback Post-COVID

• IHH Healthcare (SGX:Q0F)'s FY22 PATMI fell 17% y-o-y to RM1.5b, mainly due to the impairment of Parkway Shanghai and goodwill clinics in China, and below our estimates. Excluding exceptional items and the impact from MFRS 129, FY22 core PATMI would have grown 4% y-o-y to RM1.7b, vs a high base in FY21.
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• 4Q22 revenue (ex-MFRS 129) grew 11% y-o-y to RM5bn mainly led by the return of local and foreign patients, ramp up of Gleneagles HK, and contributions from acquired hospitals in Turkiye (Acibadem Bel Medic in Serbia and Acibadem Adana Ortopedia).
• However, 4Q22 EBITDA (ex-MFRS 129) was relatively flat (+1% y-o-y) with operational improvements seen in Malaysia (EBITDA +10% y-o-y), Turkiye (EBITDA +13% y-o-y despite the depreciation of Turkish Lira) and Gleneagles HK (higher positive EBITDA contribution), offset by Singapore (EBITDA - 13% y-o-y), India (EBITDA -8% y-o-y) and higher losses from China.
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• On a sequential basis (ex-MFRS 129), revenue, EBITDA, and core PATMI grew 8%, 10%, and 13% respectively q-o-q.
• 4Q22 EBITDA margins (ex-MFRS 129) improved marginally q-o-q to 23% vs 22% in 3Q22, with reversing q-o-q trends seen in Turkey (+5.9ppt q-o-q to 27%) and Singapore (+2.1 ppt q-o-q to 31%).
• ROE fell to 6.6% (6.4% with MFRS 129) due to impairment.
• Net gearing remained low at 0.25x at end-4Q22 vs 0.27x at end-3Q22.
• Final dividend of 7 sen per share declared, +17% y-o-y from 6 sen per share in FY21. See IHH Healthcare's dividend date.

IHH Healthcare's key operational highlights.

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Rachel Lih Rui TAN DBS Group Research | https://www.dbs.com/insightsdirect/ 2023-03-02 SGinvestors.io

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