Strong show of 4Q earnings for IHH Healthcare
KUALA LUMPUR: IHH Healthcare Bhd (IHH) reported a strong rebound in its quarterly earnings than initially anticipated in the last quarter of financial year (4QFY20) with a reported earnings of RM495.5 million.
Meanwhile, its normalised earnings excluding exceptional items came in at RM371.8 million which represents a 28.3 per cent growth year-over-year.
This brought its FY20 normalised earnings to RM715.3 million which beat MIDF Amanah Investment Bank Bhd (MIDF Research) and consensus’ fullyear FY20 earnings estimates by more than 100 per cent.
During the quarter, core performance remained intact however, its 4QFY20 revenue was lower marginally by 1.8 per cent year on year (y-o-y) due to continued soft patients volume arising from postponement of non-urgent treatments and procedures as well as lower foreign patients.
“However, earnings were higher by 28.3 per cent y-o-y due to higher EBITDA and lower finance costs,” it said in its analysis. “Earnings were also boosted by Covid-19-related services rendered by the company and in some countries like Malaysia, Turkey and India the hospitals treats walkin Covid-19 patients; and government grants and relief.
“Lower inpatients was offset by higher revenue intensity per patient.”
During the period, MIDF Research saw that Parkway Pantai operations in Singapore, Malaysia and India markets recorded contractions in inpatient admissions by 10.8, 32.3 and 18.8 per cent y-o-y respectively following travel restrictions imposed to curb the spread of Covid-19 in these countries.
It acknowledged that the group will continue to face short term business headwinds particularly in the form of soft demand arising from the ongoing Covid-19 outbreak. This is expected to continue to cap demand for medical tourism and result in deferrals of nonurgent and non-essential procedures and services in the near term.
“Nonetheless, we are maintaining our buy recommendation as we opine that the low inpatient admissions will not persist and will recover in-line with the Covid-19 vaccination drive globally and the soft patients admissions will be duly compensated by the increase in revenue per inpatient as patients gradually returns to undertake procedures that were postponed previously,” it said.
“Furthermore, we opine that the group will also benefit from higher revenue intensity per patient as the group continues to ramp up operations in its existing and newly operational hospitals.
“All in, we remain positive on IHH’s future earnings trajectory as it continues to operate in relevant markets which are not only in need of quality healthcare services but also underserved due to its large population which will increase its resilience against adversity.”