Hospital demand, expansion to lift IHH Q1, says CIMB Securities

KUALA LUMPUR: IHH Healthcare Bhd is expected to post higher revenue in the first quarter ended March 31, 2026 (Q1 FY26), driven by growing inpatient intensity and contributions from its ongoing brownfield expansion projects.

In a note, CIMB Securities Sdn Bhd said the healthcare group’s top-line growth is likely to remain positive on a year-on-year basis despite Hari Raya Aidilfitri falling 10 days earlier this year.

However, it expects revenue to weaken sequentially from the previous quarter due to the seasonal impact of the festive period, as non-urgent outpatient treatments are typically deferred during holidays, resulting in lower patient footfall.

Looking ahead, CIMB Securities expects IHH’s operations in Malaysia, India and Turkey to be the main earnings drivers in 2026, supported by expansion initiatives and merger and acquisition opportunities, particularly in Turkey.

The firm noted that earnings growth in Singapore could remain subdued due to continued pressure from payors.

“All else being equal, we expect IHH to deliver approximately 18 per cent year-on-year core net profit growth in 2026, driven by steady patient footfall, expansion initiatives and increasing case intensity,” it said.

CIMB Securities added that IHH has introduced several measures to mitigate policy and macroeconomic challenges, including periodic price reviews, service mix optimisation with a greater focus on higher-turnover daycare models, and efforts to improve efficiency and streamline business processes.

Following housekeeping adjustments to align its model with data from IHH’s 2025 annual report, the firm raised its earnings forecasts for FY26, FY27 and FY28 by two per cent, one per cent and four per cent, respectively.

It maintained its “Buy” call on the stock and increased its target price to RM10.30 from RM10 previously.

The higher valuation reflects a 15 times CY27 enterprise value-to-earnings before interest, tax, depreciation and amortisation multiple, compared with 13 times previously, as the firm narrowed the discount to peers following the recent listing of Sunway Healthcare Holdings Bhd.

The firm said IHH remains attractive due to its strong execution track record and diversified geographical presence, which provides exposure to growth markets beyond Malaysia, particularly India.

On its Malaysian operations, CIMB Securities reiterated its positive outlook, saying regulatory risks have largely eased as the implementation of the diagnostic-related group (DRG) system appears more accommodative.

The DRG framework will initially be introduced through base medical and health insurance and takaful products in 2027, with participation by private hospitals remaining voluntary.

The firm estimates Malaysia will continue to be one of IHH’s fastest-growing markets, supported by relatively low hospital bed density and rising healthcare demand.

To capture this growth, IHH is expanding capacity through several brownfield projects, including the completed upgrade of Pantai Hospital Cheras, expansion works at Gleneagles Kuala Lumpur and Pantai Hospital Penang, as well as the construction of a new Gleneagles Hospital in Kuching scheduled for completion in Q2 of 2028.

The firm also expects IHH to gradually expand its daycare service offerings, potentially through ambulatory care centres located near its hospital network, to improve operational efficiency and strengthen patient referral flows.

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المصدر: New Straits Times