Posts tagged ‘IHH’
Dr Lim: ‘Because of the depreciation of the rupiah and the ringgit against the Singapore dollar of late,there will be an impact.’
PETALING JAYA: IHH Healthcare Bhd is bracing for an impact from the plunge of the Indonesian rupiah and the Malaysian ringgit against the Singaporean dollar, its top management said yesterday.
The hospital operator’s managing director Dr Lim Cheok Peng said at a press conference call yesterday that medical tourists from Indonesia presently made up a sizeable 18%-20% of IHH Singapore’s total patient volume while about 4% of medical tourists were from Malaysia.
“Singapore being the biggest contributor in terms of revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA), (this) may have an impact as a result of this shift.
“Because of the depreciation of the rupiah and the ringgit against the Singapore dollar of late, there will be an impact as a result of this,” Lim said.
“We see a little softening of the market (in Singapore).
“We hope this is only for the short term and things may normalise itself.
“We will be in trouble again, you know, if the rupiah crashes to 16,000 to the US dollar such as what had happened in the Asian financial crisis,” he added.
Lim noted that there would be affordability issues for medical tourists at its Singaporean hospitals should the rupiah and the ringgit plunge against the US dollar.
Its chief financial officer Tan See Haw said that this was seen in the second quarter for financial year 2013 ended June 30.
During the period, Singaporean patients’ admission growth outnumbered foreign ones.
“You cannot avoid the short term implications of currency volatility, but the demand in the long term for healthcare is such that it will grow on demographic trends,” Tan said.
Based on these factors, the company will continue pursuing a growth strategy to expand bed count and is expected to add 3,300 beds over the next three years for its markets excluding Hong Kong from 4,700 beds at the moment.
“We should exceed 8,000 beds come 2017 if you include Hong Kong.
“We should have our presence through 46 hospitals then,” Lim said.
IHH yesterday reported its second quarter net profit, after minority interests excluding exceptional items and the recognition of the sale of medical suites, jumped 60% year-on-year to RM188.7mil.
The jump was due to the rise in EBITDA, savings in finance costs from loan repayment and a one-off RM22mil tax credit from the Singaporean tax authorities.
“The rise in EBITDA is due to growth in existing operations and continued cost efficiencies,” it said.
Its revenue, excluding recognition of the sale of medical suites, grew by 14% y-o-y to RM1.68bil from RM1.48bil while EBITDA registered a 20% rise y-o-y to RM419.6mil from RM349.2mil.
An artist’s impression of the City International Hospital operated by IHH in Ho Chi Minh City, Vietnam
It wants to capitalise on the huge population base in these countries
KUALA LUMPUR: IHH Healthcare Bhd, Asia’s largest hospital operator, plans to increase its presence in China and India to capitalise on the huge population base there, according to managing director Dr Lim Cheok Ping.
“It is actually part of our next five-year plan. We want to penetrate both markets in a big way,” he said, adding,
“We want to manage more and own more hospitals in both countries.”
Lim was speaking to reporters at Invest Malaysia 2013 yesterday.
On a separate note, he said the unrest in Turkey would not impact the healthcare player’s business at the moment.
“But if it’s prolonged, then it might have some impact,” he said.
He expects the company’s hospital in Turkey to start contributing to group profit in three years.
On its latest addition, the 320-bed City International Hospital in Vietnam, Lim said it was scheduled to receive its first batch of patients early next week.
“The reason we prefer to manage the hospital in Vietnam is because it is a new market for us. We want to understand the market first, and if it makes economic sense, then we would probably buy the hospital or build a new one,” he explained.
It had been previously reported that Vietnam was IHH’s second country expansion out of its main bases of Malaysia and Singapore subsequent to its public listing last year.
The nine-storey hospital, located in the International Hi-Tech Healthcare Park in Ho Chi Minh City, is managed by Parkway Pantai Ltd, a unit of IHH.
The company also announced in March a hospital deal in Hong Kong, which entails it spending RM2bil to build a private hospital in the city-state with a company owned by Cheng Yu-tung, one of its four richest billionaires.
Lim is targeting the hospital to be completed in 2016 and commissioned by 2017.
On its Singapore venture, meanwhile, Lim said, the business contributed some 80% of the company’s profits, with the rest coming from Malaysia.
via The Star Hospital operator IHH plans to go big in China, India.
Khazanah Nasional Bhd., Malaysia’s state investment company, said the value of its holdings rose 24 percent last year after making gains from divesting shares in companies, including Asia’s biggest hospitals operator.
The net asset value of Khazanah’s investments climbed to 86.9 billion ringgit ($29 billion) at the end of 2012 from 70 billion ringgit a year earlier, the Kuala Lumpur-based fund said in a statement today. It outperformed a 10 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index, which closed the year at a record.
Khazanah cut its stake in hospitals operator IHH Healthcare Bhd. (IHH) through a $2 billion initial public offering in Kuala Lumpur and Singapore in July. The fund also reduced its stake in Malaysian pay-TV operator Astro Malaysia Holdings Bhd. (ASTRO) during a $1.5 billion share sale in October, and divested national carmaker Proton Holdings Bhd.
“We believe the portfolio is balanced and well-positioned to benefit from exposure into the Asia-Pacific growth region,” Khazanah Managing Director Azman Mokhtar said in the statement. “The outlook will be steady. It will be harder to scale new highs when your base gets bigger,” he later told reporters in Kuala Lumpur.
Khazanah owns stakes in some of Malaysia’s biggest listed companies, including electricity producer Tenaga Nasional Bhd. (TNB), mobile phone company Axiata Group Bhd. (AXIATA) and lender CIMB Group Holdings Bhd. (CIMB) which all reported higher quarterly profits last year. Its holdings in the telecommunications and power sectors contributed to portfolio growth, according to today’s statement.
The fund said pretax profit fell to 2.1 billion ringgit in 2012 from 5.3 billion ringgit in 2011 and paid a 1 billion- ringgit dividend to government, according to the statement.
Khazanah and Sun Life Financial Inc. agreed to buy 98 percent of Aviva Plc and CIMB Group Holdings Bhd.’s Malaysian insurance joint venture for 1.8 billion ringgit, according to a joint statement in London today.
“This is a very good deal,” Azman said. “We are able to enter a sector in Malaysia and eventually build a footprint into the region of a very good sector, which is life insurance. This is a good way to play rising incomes.”
Direct investments by sovereign wealth funds around the world picked up in the fourth quarter of 2012 from a year earlier, signaling a rebound after spending dropped to a six- year low in 2012, according to the Sovereign Wealth Fund Institute.
Full-year direct spending, which excludes money outsourced to other funds or asset managers, slumped 36 percent to $57.3 billion, the Las Vegas-based institute said in a statement yesterday. That’s the lowest since 2006, when direct investments amounted to $14.8 billion, it said.
PETALING JAYA: IHH Healthcare Bhd’s unit in Turkey has acquired a 100% stake in a new subsidiary for US$1.5mil (RM4.56mil).
In a statement to Bursa Malaysia, IHH said its indirect subsidiary Acibadem Poliklinikleri AS acquired the unit, Tolga Saglik Hizmetleri AS, whose principal activity was in the provision of healthcare services, on Dec 1.
By RHB Research Institute
Fair Value: RM3.53
IHH’s third-quarter ended Sept 30 net profit of RM96.1mil (-19.1% year-on-year; +12.4% quarter-on-quarter) was below our and consensus expectations with nine-month core net profit of RM329.6mil accounting for 54% and 57% of our and consensus full-year estimates respectively.
Key variances were higher-than-expected nine-month depreciation and amortisation expense of RM293.3mil and RM50.5mil, compared with our full-year projection of RM311.8mil and RM43.1mil respectively, which we believe was mainly due to the opening of Mount Novena Hospital in end-July.
Excluding the sale of Novena’s medical suites amounting to RM1.21bil in the second quarter, third-quarter revenue of RM1.5bil came in flat quarter-on-quarter higher inpatient admissions (+1.3%) in Singapore due the opening of the new Mount Novena Hospital was offset by a 4.9% and 4.2% decline in inpatient admissions in Malaysia and Turkey respectively.
We believe this was mainly due to the Hari Raya holiday season and the Hungry Ghost Festival in Malaysia as well as the summer season in Turkey, which typically leads to a lower number of admissions, and a marginal decrease in complex treatment procedures.
This coupled with a RM23.9mil earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss for the new Mount Novena hospital and a higher depreciation expense led to a 12.4% decline in third-quarter core net profit.
Despite remaining in the red for the quarter, EBITDA losses of the new Mount Novena Hospital continues to narrow to RM23.9m in the third quarter (from RM28.3mil in the preceding quarter) as a progressive ramp-up in operations helped offset against overhead expenses incurred in newly opened areas.
According to management, inpatient flow has improved to more than 500 admissions in the third quarter (from about 200 in the second quarter) and plans to turn operations EBITDA positive by mid-2013 remains intact.
The risks include: 1) a significant increase in medical insurance premiums, which could result in lower demand; 2) lower-than-expected patient numbers, if there is a serious disease outbreak (such as SARS or swine flu); 3) weaker-than-expected earnings from overseas operations; and 4) slower-than-expected turnaround in new hospitals.
We reduced our financial year 2012 (FY12) to FY14 earnings forecasts by 9.3% to 20.7% after increasing our FY12 to FY14 depreciation and amortisation expense by 4.5% to 35.2% per year and 77.4% per annum respectively.
Despite the cut in our numbers, we maintain our “outperform” call on IHH with an unchanged sum-of-parts fair value of RM3.53.
Target price: RM8.30
GENTING Plantations’ first nine months period of the financial year 2012 (FY12) core net profit of RM240mil came in below the consensus but was broadly within our expectations.
It made up only 65% of the consensus’ FY12 forecast of RM371mil but was higher at 72% of our forecast of RM332mil.
We believe that the consensus may have overestimated the crude palm oil (CPO) price performance in the third quarter of FY12, which had weakened from September onwards due to an inventory surge.
Note that we have lowered our FY12 CPO price estimate to RM2,975 per tonne in our plantation sector update report on Oct 11.
There were no dividend announced as expected.
Year-on-year, the nine-month core net profit declined 30% to RM240mil as the average CPO price fell 8% to RM3,060 per tonne while the fresh fruit bunch (FFB) volume dropped by 7% to 932,071 tonne.
Cost of production is estimated to have increased by 15% due to the higher wage and fertiliser costs.
Quarter-on-quarter, the third-quarter core net profit jumped 27% to RM95mil as the impact of the FFB volume jump (38% higher to 380,815 tonnes) outpaced that of lower CPO prices (11% lower to RM2,858 per tonne).
The CPO price outlook has deteriorated for both the fourth quarter and the calendar year 2013.
With the cargo surveyors’ exports data for the first 25 days of November showing a decline by around 2%, we see a higher possibility now of Malaysian Palm Oil Board’s November inventory level registering another record high.
Our FY12 to FY13 estimated (FY13E) core net profit have been cut by 5% to 8% to RM313mil to RM381mil.
Our FY12E CPO price assumption has also been cut to RM2900 per tonne (from RM2975 per tonne) given the worse-than-expected CPO prices so far in the fourth quarter.
FY13E average CPO price assumption has been lowered to RM2850 per tonne (from RM3000 per tonne).
We have downgraded the stock to “underperform”. The fourth-quarter earnings could disappoint even more.
Note that the fourth-quarer average CPO price has been weak so far at RM2266 per tonne (21% lower quarter-on-quarter).
We have reduced our target price to RM8.30 (from RM9 previously) based on an unchanged forward price-to-earnings ratio of 16.5 times on the lower FY13E earnings per share of 50.3 sen (from 54.4 sen previously).
The risks involved would be better-than-expected CPO prices.
KUALA LUMPUR: RHB Research Institute has initiated coverage of IHH Healthcare with a sum-of-parts derived fair value is RM3.53 a share.
The research house said on Wednesday while valuations are relatively expensive at 33.5 times CY13 PER, it believes there is still room for valuations to move higher.
It said this was based on the strong earnings visibility and wider network of hospitals, which could result in significant savings from better economies of scale compared to its regional peers.
RHB Research said on Wednesday IHH is a global private healthcare service provider, which owns a 60% equity stake in Acibadem, Turkey’s largest hospital chain, and an 11.2% stake in India’s Apollo Hospitals.
IHH is now the second largest private healthcare service provider in the world, with operations spanning across eight countries.
“Core operations are located in Singapore, Turkey and Malaysia, which together accounted for 91.9-92.8% of FY09-11 revenue. Both Singapore and Turkey are popular destinations for medical tourists given their strategic locations as well as advanced medical technology,” said the research house.
In Malaysia, a declining trend in public healthcare expenditure as a percentage of total healthcare expenditure and growing insurance coverage are expected to sustain earnings growth moving forward.
“We forecast FY12-14 core net profit growth of 5.8%, 25.9% and 26.0% respectively. Singapore will be the main earnings driver for the company, driven by the gradual ramp-up of the new state-of-the-art Mount Novena hospital,” said RHB Research.