‘Prince Court set for earnings uplift under IHH’
KUALA LUMPUR:
Prince Court Medical Centre, which only turned profitable last year, is expected to see an uplift in earnings under the hands of IHH Healthcare Bhd, said analysts.
IHH is buying the entire stake in Prince Court for RM1.02 billion from Khazanah Nasional Bhd.
Public Investment Bank Bhd (PublicInvest) said IHH had the capability to help Prince Court achieve higher level of success.
“Judging on IHH’s capability to turn Fortis around ahead of its targeted 100 days, we believe IHH can also bring Prince Court to greater heights,” it said in a note.
In the financial year 2016, PublicInvest said Prince Court had registered a net loss of RM4.01 million, bringing total accumulated losses to RM1.4 billion.
However, it was reported to have turned around in financial year 2018, with a net profit of RM51 million.
It said Prince Court’s revenue intensity and occupancy rate was comparable to IHH’s flagship hospitals in the Klang Valley.
Prince Court operates 277 licensed beds, offering a wide range of medical, surgical and hospital services, including cancer, gastrointestinal diseases, interventional cardiology, in-vitro fertilisation, nephrology, occupational health, orthopaedic and rehabilitation medicine.
PublicInvest said the acquisition would also be positive for IHH as Prince Court’s prime location should help the healthcare operator gain a larger market share in medical tourism.
However, it said the earnings uplift for IHH following the acquisition was not material as it only made up of about six per cent of its bottom line.
Prince Court’s 277-licensed beds made up only about two per cent of IHH’s total existing beds, it said.
Kenanga Research said Prince Court was one of the key strategic private hospitals in the Klang Valley and expected to enable IHH to leverage its wide network of hospitals to deliver potential synergies and offerings.
“The acquisition is expected to contribute less than one per cent to our financial year 2020 earnings forecast and will only put a small dent in IHH’s net gearing of 0.2 times as at June,” it said.