IHH Healthcare Berhad: Financial Analysis Report – Q3 2024 Net Profit Decline of 10%

Business Description

IHH Healthcare Berhad is a leading global healthcare provider, operating a network of hospitals and healthcare facilities across various regions, including Singapore, Malaysia, India, Greater China, Turkiye, and Europe. The company is involved in multiple segments such as Hospital and Healthcare, IMU Health, Labs, and PLife REIT, catering to a diverse customer base that includes both local and international patients.

Industry Position and Competitors

IHH Healthcare holds a significant position within the healthcare industry, competing with other major players such as Fortis Healthcare and Parkway Pantai. The company commands a substantial market share due to its extensive geographical footprint and comprehensive range of healthcare services, including specialized medical treatments and diagnostics.

Revenue Streams and Competitive Advantage

The company generates revenue through its hospital services, laboratory services, and real estate investment trusts (REITs). Its customer base consists of patients seeking quality healthcare services, while its supply chain is supported by strong relationships with pharmaceutical suppliers and medical equipment manufacturers. IHH’s competitive advantage lies in its established brand reputation, high-quality healthcare standards, and strategic acquisitions to enhance service offerings.

Financial Statement Analysis

Income Statement

For the financial period ended 30 September 2024, IHH Healthcare reported a revenue of RM17,691 million, an increase from RM15,642 million in the previous year. However, the profit for the period saw a slight increase to RM2,324 million from RM2,575 million, reflecting a 10% decline in net profit. The basic earnings per share (EPS) for Q3 2024 was recorded at 6.06 sen, a minor increase from 6.04 sen in Q3 2023.

Balance Sheet

The total assets of the company as of 30 September 2024 amounted to RM48,461 million, a decline from RM50,192 million at the end of the previous financial year. The total equity attributable to owners of the company decreased to RM28,501 million from RM29,106 million, indicating a decline in net asset value per share to RM3.24 from RM3.30.

Cash Flow Statement

IHH’s net cash from operating activities for the period was RM3,053 million, showcasing a healthy cash flow generation. However, net cash used in investing activities was significant at RM2,559 million, reflecting ongoing capital expenditures and acquisitions.

Dividends and Earnings

No dividends were proposed for the current financial period, reflecting a cautious approach in light of the profit decline. The previous year’s dividend was RM4.50 per share.

Key Findings

Strengths

• Strong revenue growth of 13% year-on-year.
• Robust cash flow from operating activities.
• Strategic acquisitions enhancing service delivery.

Risks

• 10% decline in net profit, indicating potential profitability issues.
• Increased costs due to inflation and operational expenses.
• High capital expenditures impacting cash reserves.

Future Actions

As of the report date, 28 November 2024, investors should consider holding their stock if they are currently invested, while keeping a close eye on the company’s performance amidst rising costs and declining profits. For potential investors not currently holding the stock, it may be prudent to wait for clearer signs of recovery in profitability or improved cost management before entering.

Disclaimer

This report is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

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