IHH Healthcare (IHH MK) Initiate at Buy: Pruning for positive performance

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IHH Healthcare (IHH MK) Initiate at Buy: Pruning for positive performance

think DFI Retail (DFI SP, Hold, TP: ROE (%) 6.5 7.4 7.9 8.2

USD4.30) is a good case study of how to exit unprofitable businesses and pay special

52-WEEK PRICE (MYR)

dividends – moves which were rewarded by the market.

12.00

Growth forecasts. Over 2025-28 we forecast a revenue CAGR of c9.5% and a net

income CAGR of 15.7% as well as improvements in EBITDA margin. Türkiye, Malaysia, 8.95

and India (in that order) should be the primary revenue drivers as we expect IHH to add 5.90

another 1,500 beds over the forecast period. Growth will be driven by operational 07/25 01/26 07/26

excellence (Türkiye), intensifying revenue, closer payor relationship, growing medical Target price: 10.80 High: 9.39 Low: 6.52 Current: 8.32

tourism (Malaysia), improving asset utilisation and profitability (India). In Singapore, Source: LSEG IBES, HSBC estimates

however, we see near-term headwinds due affordability issues.

Selviana Aripin*, CFA

Valuation and risks. We initiate on IHH with a Buy rating and a discounted cash flow Analyst, ASEAN Consumer and Healthcare

(DCF) based TP of MYR10.80. Our valuation methodology is in line with our coverage The Hongkong and Shanghai Banking Corporation Limited,

Singapore Branch

across the ASEAN hospital space. Our DCF-based TP implies 29.8% upside from current selviana.aripin@hsbc.com.sg

levels, a 35.7x 2027e PE multiple, and a 15.1x 2027e EV/EBITDA multiple; accordingly, +65 6658 0610

we initiate coverage on the stock with a Buy rating. Our TP for IHH’s Singapore-listed Rayman Kaur Chadha*

entity (IHH SP, SGD2.78, Buy) is SGD3.48 (we use a SGD/MYR exchange rate of 3.10 to Associate

Bangalore

arrive at our TP). Our DCF-based TP implies 25.2% upside from current levels;