Broker: Maybank Investment Bank Berhad
Date of Report: September 1, 2025
IHH Healthcare: Robust Earnings Amid Payor Pressures – In-Depth Financial Analysis & Outlook
Overview: IHH Healthcare Delivers Steady Growth in Challenging Market Conditions
IHH Healthcare Berhad, a leading international healthcare provider, continues its trajectory of stable earnings and resilient growth. Despite regulatory headwinds and mounting payor pressures in its key markets, the group’s diversified portfolio and operational strength have supported strong revenue intensity and stable EBITDA margins. The recent results for the first half of 2025 reinforce a bullish outlook for the remainder of the year, with no changes to growth forecasts and a maintained BUY recommendation at a SOTP-based target price of MYR7.97.
Key Highlights and Analyst Recommendation
First half 2025 (1H25) core net profit reached MYR1.04 billion, in line with expectations.
Revenue growth was driven by Malaysia (+15% YoY) and Türkiye/Europe (+16% YoY).
EBITDA margins held firm at 21%, despite market headwinds.
Interim dividend declared at 5.0 sen, representing a payout ratio of 21%.
Forecasts for FY25E-27E maintained: revenue growth of 9-11%, blended EBITDA margins of 22-23%.
BUY rating reaffirmed with a target price of MYR7.97.
Financial Performance: Detailed Breakdown
| Metric |
2Q25 |
1Q25 |
2Q24 |
6M25 |
6M24 |
| Revenue (MYRm) |
6,298.0 |
6,294.0 |
6,093.0 |
12,592.0 |
12,048.0 |
| EBITDA (MYRm) |
1,354.0 |
1,343.0 |
1,349.0 |
2,697.0 |
2,715.0 |
| Core Net Profit (MYRm) |
518.0 |
521.0 |
571.0 |
1,039.0 |
1,157.0 |
| EBITDA Margin (%) |
21.5 |
21.3 |
22.1 |
21.4 |
22.5 |
| Pretax Margin (%) |
11.5 |
12.1 |
14.8 |
11.8 |
15.2 |
Segment Analysis: Geographic and Operational Performance
Malaysia Operations
– Delivered standout revenue and EBITDA growth (+15%/+14% YoY). – Growth driven by Island Hospital and higher surgical case complexity. – Effective cost rationalisation and insurer discounts helped mitigate payor pressures. – Structural shift from inpatient to daycare gaining traction, enabling more efficient bed use and reduced future capex.
Singapore Operations
– Revenue impacted by renovations at Mt Elizabeth Hospitals, concluded in 2Q25. – ARIP rose +12% YoY, offsetting lower inpatient volumes. – Full reopening of Mt Elizabeth Orchard expected in 2Q26.
Türkiye & Europe Operations
– Excluding MFRS129 adjustments, delivered +16% revenue and +7% EBITDA growth YoY. – Margins were diluted due to start-up costs at Acibadem Kartal and Vitosha Hospitals. – Continued revenue momentum with temporary margin compression.
India Operations
– Double-digit EBITDA growth sustained. – Operational synergies between Fortis and Gleneagles driving profitability.
Hong Kong Operations
– Expanded capacity by +18 beds. – ARIP increased by 7% YoY.
Payor Pressures and Strategic Adaptations
Payor pressure remains a challenge across IHH’s core markets. In Malaysia, these pressures are managed through cost rationalisation and insurer discounts. Notably, the transition from inpatient to daycare models is accelerating in both Malaysia and Singapore, improving efficiency and lowering capital expenditure needs.
Dividend and Shareholder Returns
Interim dividend of 5.0 sen declared (21% payout vs. 18% previous year).
Dividend yield expected to improve gradually over the next few years.
Net dividend yield for FY25E: 1.5%, with projected increases to 2.1% by FY27E.
Valuation: Sum-of-Parts (SOTP) Approach
| Segment |
MYRm |
MYR/shr |
Valuation Method |
| Singapore |
26,582.0 |
3.00 |
14x FY26E EV/EBITDA |
| Malaysia |
19,603.0 |
2.22 |
12x FY26E EV/EBITDA |
| Acibadem |
11,829.1 |
1.34 |
7x FY26E EV/EBITDA less 10% minority interest |
| Fortis Healthcare |
8,484.8 |
0.96 |
Market cap based on INR693.47 consensus TP |
| Greater China, SEA & others |
(1,081.6) |
-0.12 |
End-FY26E BVPS less 40% minority interest |
| Labs |
2,483.8 |
0.28 |
End-FY26E BVPS |
| PLife REIT |
3,263.3 |
0.37 |
Market cap based on SGD4.60 consensus TP |
| Investment properties & others |
6,051.0 |
0.68 |
End-FY26E BVPS |
| Net Debt (ex Acibadem, Fortis, China, PLife REIT) |
(6,729.8) |
-0.76 |
End-FY26E |
| Total |
70,485.5 |
7.97 |
|
Key Financial Ratios & Metrics
| Metric |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue Growth (%) |
16.4 |
16.5 |
8.9 |
10.5 |
9.6 |
| EBITDA Margin (%) |
22.2 |
22.3 |
22.3 |
22.9 |
22.7 |
| Net Dividend Yield (%) |
3.1 |
1.4 |
1.5 |
1.8 |
2.1 |
| Core FD P/E (x) |
27.4 |
29.3 |
28.1 |
23.4 |
21.0 |
| ROAE (%) |
10.7 |
9.0 |
6.9 |
8.0 |
8.5 |
Shareholder Structure & Market Performance
Major shareholders include Mitsui & Co., Ltd. (32.8%), Khazanah Nasional Bhd (25.9%), Employees Provident Fund (11.0%).
Free float: 20.5%.
Market capitalisation: MYR59.9 billion (USD14.2 billion).
52-week share price range: MYR7.50/6.27.
12-month price target: MYR7.97 (+19% upside).
Recent price performance: up 8% in last 12 months; relative to the Kuala Lumpur Composite Index, outperformed by 13%.
Balance Sheet Strength and Cash Flow Highlights
Total assets: MYR58.3 billion (FY25E), rising to MYR62.8 billion by FY27E.
Net gearing expected to decrease from 39.1% (FY24A) to 28.2% (FY27E).
Free cash flow yield projected to grow from 4.0% (FY25E) to 6.0% (FY27E).
Cash & short-term investments forecasted to nearly double from FY24A to FY27E.
Historical Ratings and Target Price Progression
Consistent BUY recommendations over the past 12 months, with target prices ranging from RM7.1 to RM8.0.
Current BUY rating supported by sound fundamentals and positive operational outlook.
Conclusion: IHH Healthcare Well-Positioned for Continued Growth
IHH Healthcare stands out as a resilient, diversified healthcare leader delivering steady growth and shareholder value amid macroeconomic and regulatory challenges. With a strong balance sheet, robust cash flow, and proactive strategies to adapt to market pressures, IHH remains well-positioned for future expansion. Investors can expect continued upside, stable margins, and increasing dividends as the group capitalizes on its operational strengths and portfolio diversity.
Contact Information
For further information, IHH Healthcare and Maybank Investment Bank Berhad have offices in Malaysia, Singapore, London, Hong Kong, Indonesia, India, Philippines, Thailand, and Vietnam, with contact details available for direct inquiries.
Analyst Coverage:
Nur Natasha Ariza (Healthcare, Media)
Yin Shao Yang (Gaming, Construction, Aviation, Non-Bank Financials)
Contact details are available for each analyst and regional research office.
Disclaimer:
This article is for informational and investment research purposes only and does not constitute financial advice. Investors are encouraged to seek professional guidance tailored to their individual investment objectives and risk profiles.
