KUALA LUMPUR: IHH Healthcare Bhd's business performance remains strong on robust structural demand growth for healthcare services, according to Affin Hwang Capital.
The research house said IHH Healthcare was seeing a healthy uptick in the number of inpatient admissions – six months 2022 (6M22) inpatient admissions in Malaysia, Acibadem and India were higher year on year (yoy) by 25 per cent, 11 per cent and 6 per cent, respectively.
While inpatient admissions in Singapore have slipped by 3.0 per cent yoy in 6M22, the firm expects the return of foreign patients to drive its second half of 2022 (2H22) performance.
"Elsewhere, revenue intensity at key markets are moderating from the 2021 high, but remained higher than the 6M19 level (rose 2 per cent to 41 per cent)," it said.
Affin Hwang said while rising costs may hit 2022 earnings profitability, it looks for higher revenue and cost pass through to lift 2023 earnings.
The firm forecast rising costs to lead to IHH's earnings before interest, taxes, depreciation, and amortisation (EBITDA) falling by 8.0 per cent yoy in 2022, before growing 7.0 per cent yoy in 2023 on higher revenue and cost pass on.
"We are lowering our 2022-2024 core earnings by 4.0-6.0 per cent after assuming lower earnings from Singapore and higher start-up losses from Greater China, cushioned by improving prospects in Malaysia and India."
Affin Hwang maintained its "Buy" call on IHH Healthcare with a lower target price of RM7.00 from RM7.30 previously.