Sunday, October 17

IHH performs better than previous year on higher inpatient volumes

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KUCHING: IHH Healthcare Bhd (IHH) has performed better in financial year 2014 (FY14) than the previous year on higher inpatient volumes, analysts view.

In a statement on Bursa Malaysia, IHH noted that for the full year ended December 31, 2014, the group had again demonstrated robust growth across all key metrics.

IHH said that headline revenue grew nine per cent year on year (y-o-y) to 7.3 billion, which lifted earnings before interest, depreciation and amortisation (EBITDA) up 17 per cent to RM1.9 billion, which in turn spurred profit after tax and minority interest (PATMI) (excluding exceptional items) to increase 29 per cent to RM785 million.

According to the research arm of TA Securities Holdings Bhd (TA Research), against the previous year, an improved performance was mainly attributed to higher patient volumes.

TA Research noted that this stemmed from both existing operations and the new openings of Acibadem Atakent Hospital (January 2014) and Pantai Hospital Manjung (May 2014).

Notwithstanding start-up losses, it added that EBITDA margins (excluding PLife REIT) increased 0.6 per cent-points to 22.6 per cent – resulting from higher operating leverage.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) further noted that the higher inpatient admissions was compounded by increase in revenue intensity for all three markets with the Malaysia operations recording a staggering +11.5 per cent y-o-y increase to RM4,993 per inpatient admission.

Singapore and Turkey also posted fairly strong growths of 7.4 per cent y-o-y to RM23,736 and 8.4 per cent y-o-y to RM10,286 respectively.

The research arm noted that management attributed these increments to price revisions and more complex cases. All in, MIDF Research remained ‘neutral’ on IHH. The research arm noted that this implies FY15 price earnings ratio (PER) of 39.2-fold before easing to 31.9-fold.

“IHH’s share price performed strongly since the start of the year and we believe this could be due to the defensive nature of the sector’s earnings,” it said.

On the other hand, TA Research made changes to its earnings estimates by consolidating year-end figures into its model and accounting for stronger than expected inpatient growth, increased occupancy rate for Singapore and Malaysia by two to four per cent.