KUALA LUMPUR: RHB research remains upbeat on IHH Healthcare Bhd's expansion plans, given its unique geographical presence that gives it exposure to high-growth regions.
The company is looking to increase new bedcount in developing countries like Malaysia and India, while shifting its focus to preventive care in mature markets such as Hong Kong and Singapore, such as expanding ambulatory care services to ease the congestion in hospitals.
IHH Healthcare has a new bed count target of 3,800 beds in the next five years.
Of this, 34 per cent of the new beds are for Malaysia, while another 48 per cent for India.
The key rationale behind the expansion plan is its current low bed per 1,000 population ratio for both Malaysia (2.1) and India (1.7), which still falls short of that of developed nations like Singapore (2.5).
IHH Healthcare also intends to retain its China division (Parkway) and to turn around the business.
Its greater China division reported a RM9.1 million earnings, before interest, tax, depreciation and amortisation vs a loss of RM7.5 million in the third quarter ended Sep 30, 2022.
RHB Research reiterated its Buy call on IHH Healthcare while maintaining its target price of RM6.90 on the stock, as the company's third quarter ended September 30, 2023 earnings were in line with its expectations.
It said the consolidation of newly acquired hospitals, easing inflation pressure from Turkey and the conclusion of Fortis' mandatory takeover offer (MTO) are key re-rating catalyts for the near term.
Key downside risks to its rating include MTO overhang on Fortis, lower-than-expected patient volume and revenue intensity, and higher-than-estimated operating costs.