Turkey-linked stocks fall
Share prices of IHH and MAHB drop after Turkish lira plunges
PETALING JAYA: The unfolding economic crisis in Turkey is sapping investor appetite for two large Malaysian firms with significant business operations in the country.
Shares in IHH Healthcare Bhd and Malaysia Airports Holdings Bhd (MAHB) were battered yesterday after the Turkish’ lira plunged to a new record low against the US dollar.
IHH owns 60% of Turkey-based healthcare group Acibadem Holdings, which contributes about a third of its revenue. MAHB, meanwhile, owns a 100% stake in an international airport in Istanbul.
Analysts said a weakened lira would require more Turkish local currency to convert to the ringgit, and concerns are that it would affect both IHH and MAHB’s Turkish performance after currency translation.
Another big-cap with business in Turkey is Tenaga Nasional Bhd (TNB). The firm’s exposure in Turkey is via its 30% stake in GAMA Enerji, which the group acquired in 2016 for US$255mil.
Given its 30% stake, GAMA Enerji accounts for a small fraction of TNB’s annual profits, but Nomura Research said there is a risk for TNB if the situation in Turkey continues to deteriorate.
TNB had recorded a RM280mil goodwill from the GAMA Enerji acquisition. “We believe there could be some risk of this goodwill being written off,” it said.
It also said that the lira’s depreciation could hurt GAMA Enerji’s financials and growth plans.
Reuters reported that the currency was now down more than 36% this year, and 17% this month alone.
By the end of the trading day, IHH had fallen by 30 sen or 5.22% to RM5.45, while MAHB had dropped 53 sen or 5.38% to RM9.33. IHH was also the most actively traded stock on Bursa Malaysia yesterday.
IHH’s Turkey exposure contributes quite significantly to the group’s overall top and bottomlines.
According to its 2017 annual report, Acibadem Holdings owns 21 hospitals and 16 medical centres in Turkey, Macedonia and Bulgaria.
Its Turkey operations have been a major growth driver for it in recent times.
In its first quarter to end-March, IHH saw a year-on-year growth of 12% in revenue and 29% in terms of earnings before interest, taxes, depreciation and amortisation (Ebitda).
This was the biggest country segment growth for the group compared to the other markets it is present in.
Turkey is also one of IHH’s home markets, which counts among others Malaysia, Singapore and India.
In IHH’s financial year 2017 (FY17), its Turkish operations contributed about 34.58% to its revenue and 27.11% of group Ebitda.
Acibadem had also recorded an average revenue per inpatient admission of 7,956 liras.
Meanwhile, where MAHB is concerned, the company owns a 100% stake in Istanbul’s second-largest airport – Sabiha Gokcen International Airport (SGIA).
Its annual report showed that MAHB has owned a 100% stake in SGIA since 2014.
The company is currently constructing the boarding hall expansion of the SGIA, but its overall Turkish operations still posted a pretax loss of RM76.5mil with a revenue growth of 22.3% to RM272.7mil for its first quarter.
Turkey is one of two country business segments for MAHB.
The other country that also contributes to the airport operator is Qatar.
In its headline key performance indicators (KPI), MAHB is expecting its Turkey operations to contribute RM880.9mil to group Ebitda in FY18.
MAHB is expecting the group’s total Ebitda to be at RM2.09bil for the whole of FY18.
The airport operator had put a note when announcing this KPI that the figures are assuming that there would be no significant changes in the prevailing economic and political conditions, among other factors.