UOB Kay Hian
Date of Report: Tuesday, 02 September 2025
IHH Healthcare Bhd: Disappointing 2Q25 Results, But Stronger Second Half Expected
Executive Summary
IHH Healthcare Bhd (IHH MK), a leading healthcare provider across Asia and beyond, reported a weaker-than-expected second quarter for 2025. Despite notable strengths in certain geographies, the company faced headwinds from currency fluctuations, payer pressures in key markets, and increased start-up costs for new facilities. However, with upcoming hospital reopenings and ramp-ups, UOB Kay Hian maintains a BUY recommendation, albeit with a trimmed target price. This article provides an in-depth analysis of IHH’s latest results, regional performance, financials, valuation, and outlook.
Company Snapshot
Share Price (as of report): RM6.79
Target Price: RM7.90 (previously RM8.30)
Potential Upside: +16.3%
Market Cap: RM59.99 billion (~US$14.2 billion)
Business: Hospital and healthcare services in Singapore, Malaysia, Turkey, India, Hong Kong, and others.
Major Shareholders: Mitsui & Co. (32.8%), Khazanah Nasional (25.6%), EPF (10.4%)
2Q25 Financial Results: Key Highlights
| Metric |
2Q25 |
QoQ Change |
YoY Change |
1H25 |
YoY Change |
| Revenue (RMm) |
6,298 |
+0.1% |
+3.4% |
12,592 |
+4.5% |
| EBITDA (RMm) |
1,354 |
+0.5% |
-1.0% |
2,701 |
-1.3% |
| Net Profit (RMm) |
443 |
-13.8% |
-28.9% |
957 |
-31.2% |
| Core Profit (RMm) |
419 |
-1.4% |
-4.1% |
844 |
+0.5% |
| EBITDA Margin (%) |
21.5 |
+0.1ppt |
-1.0ppt |
21.5 |
-1.3ppt |
| Core Profit Margin (%) |
6.7 |
-0.1ppt |
-0.5ppt |
6.7 |
-0.3ppt |
Key Takeaways
Core profit fell short of expectations, achieving only 44% of the firm’s and 43% of consensus full-year forecasts.
Singapore and Malaysia struggled with payer pressure and lower-than-expected contributions.
Currency fluctuations (stronger ringgit) adversely impacted overseas operations.
Acibadem (Turkey) delivered robust revenue growth, but start-up costs for new facilities dampened margin expansion.
Regional Performance Breakdown
Singapore: Dragged by Renovations and Payer Pressure
Revenue declined 3.0% YoY in 2Q25 due to a 9.4% drop in inpatient volumes, attributed mainly to Mount Elizabeth Orchard (MEO) renovations and payer pressure.
Revenue intensity increased 9.6%, partially offsetting the decline.
EBITDA down 13.0% YoY; operational earnings impacted by lower volumes and cost pressures.
Outlook: Sequential recovery expected from 3Q25 as MEO reopens in phases; full ramp-up by 2Q26.
Malaysia: Island Hospital Shines Amidst Pressure
Revenue up 15.2% YoY, driven almost entirely by Island Hospital and Timberland acquisitions, while legacy hospitals remained flat.
EBITDA increased 14.2% YoY, supported by Island Hospital’s strength.
Payer pressure remains, but insurer negotiations are largely settled.
Turkey (Acibadem): Strong Demand, Margin Headwinds
Revenue surged 15.8% YoY, reflecting a 32% increase in revenue intensity and 4% growth in inpatient volumes.
Driven by robust local demand and economic recovery in Turkey.
EBITDA rose 6.8% YoY, but margin expansion was limited by start-up costs for two new facilities.
India & Hong Kong: Contrasting Fortunes
India: Revenue grew 15% YoY in local currency; on reported basis, growth was just 2% due to currency effects. Revenue intensity rose 8%, inpatient volume 6%, and earnings up 14% YoY.
Hong Kong: Revenue contracted 1% YoY, earnings dropped 16% due to new bed additions. Management expects improvement as new capacity ramps up in 2H25.
Segment Financials
| Segment |
2Q25 Revenue (RMm) |
QoQ % |
YoY % |
2Q25 EBITDA (RMm) |
QoQ % |
YoY % |
| Singapore |
1,514 |
-0.4% |
-3.0% |
428 |
-0.7% |
-13.0% |
| Malaysia |
1,166 |
+4.3% |
+15.2% |
289 |
+5.9% |
+14.2% |
| Acibadem |
1,990 |
-0.6% |
+15.8% |
359 |
-0.8% |
+6.8% |
| Others |
1,628 |
-1.5% |
-9.6% |
278 |
+0.4% |
+3.7% |
Key Financial Ratios and Forecasts
| Year (Dec) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (RMm) |
20,935 |
24,383 |
26,385 |
28,971 |
31,724 |
| EBITDA (RMm) |
5,650 |
5,542 |
4,191 |
4,731 |
5,129 |
| Operating Profit (RMm) |
4,651 |
4,521 |
3,145 |
3,659 |
4,028 |
| Net Profit (adj., RMm) |
1,280 |
1,685 |
1,807 |
2,066 |
2,381 |
| EPS (sen) |
14.6 |
19.2 |
20.6 |
23.6 |
27.2 |
| PE (x) |
46.5 |
35.3 |
32.9 |
28.8 |
25.0 |
| P/B (x) |
2.0 |
2.0 |
1.9 |
1.8 |
1.7 |
| EV/EBITDA (x) |
12.9 |
13.2 |
17.5 |
15.5 |
14.3 |
| Dividend Yield (%) |
0.7 |
0.8 |
0.9 |
1.0 |
1.2 |
| ROE (%) |
10.7 |
9.0 |
5.9 |
6.4 |
7.1 |
SOTP Valuation Summary
| Business/Asset |
Value (RMm) |
Value per Share (RM) |
Remarks |
| Parkway Pantai Limited (100%) |
33,936 |
3.84 |
NPV of FCFF (8.0% WACC, 1.5% LTG) |
| Acibadem (90%) |
26,472 |
2.99 |
NPV of FCFF (17.6% WACC, 2.5% LTG) |
| Fortis (31.1%) |
7,028 |
0.80 |
NPV of FCFF (9.4% WACC, 3.0% LTG) |
| Parkway Life REIT (35.7%) |
2,404 |
0.27 |
– |
| SOP Equity Value |
69,840 |
7.90 |
|
Earnings Revision and Risks
Earnings trimmed: 2025-2027 forecasts cut by 6.2%/5.9%/6.6% respectively due to revised assumptions.
Key downside risks:
Execution risk in ramping up new and acquired hospitals.
Potential shortfall in turning around Fortis.
Possible heightened regulatory hurdles across key markets.
Recommendation & Valuation
BUY maintained with a revised SOTP-based target price of RM7.90 (previously RM8.30).
The new target price implies 33.5x 2026F PE, which is close to -0.5SD below the five-year mean PE.
Medium-term growth is underpinned by brownfield expansion across multiple geographies.
IHH’s ongoing efforts to de-risk operations and realize cost synergies, particularly in Turkey and India, are yielding results.
Current valuation below -0.5SD of five-year mean PE is considered an attractive entry point.
Environmental, Social, and Governance (ESG) Highlights
Environmental
15% of non-scheduled waste diverted from landfills in 2020.
All medical waste and toxins are treated before discharge or incineration to safeguard public health.
Social
Non-discriminatory hiring practices and a strong focus on equal opportunity in the workplace.
Governance
Board composed of 54% Independent Non-Executive Directors, ensuring oversight and balanced governance.
Outlook
Second half 2025 is expected to show improvement as Mount Elizabeth Orchard hospital reopens and new Acibadem facilities transition from cost to revenue contribution.
Brownfield expansions and cost synergies are expected to drive medium-term growth.
IHH’s financial strength and diversified portfolio across high-growth and developed healthcare markets position it well for a cyclical upturn.
Conclusion
IHH Healthcare Bhd’s 2Q25 underperformance reflects both cyclical and one-off pressures, especially from Singapore and Malaysia. However, the company’s fundamentals remain solid, with a strong pipeline for growth and operational improvements expected in the coming quarters. The revised target price and continued BUY call reflect confidence in IHH’s ability to execute on its strategy and capitalize on healthcare demand growth in its key markets.
