KUALA LUMPUR: Prince Court Medical Centre (PCMC), which only turned profitable last year, is expected to see an uplift in earnings moving forward under the hands of IHH Healthcare Bhd, said analysts.
IHH is buying a 100 per cent stake in PCMC for RM1.02 billion from Khazanah Nasional Bhd.
Public Investment Bank Bhd said IHH has the capability to help PCMC achieve a higher level of success.
“Judging on IHH’s capability to turn Fortis around ahead of its targeted 100 days, we believe IHH can also bring PCMC to greater heights going forward,” it said in a note.
In financial year (FY) 2016, the research firm said PCMC had registered a net loss of RM4.01 million, bringing total accumulated losses to RM1.4 billion.
However, it was reported to have turned around in FY18, with a net profit of RM51 million.
PublicInvest said PCMC’s revenue intensity and occupancy rate was comparable to IHH’s flagship hospitals in the Klang Valley.
PCMC operates 277 licensed beds, offering a wide range of medical, surgical and hospital services including cancer, gastrointestinal diseases, interventional cardiology, in-vitro fertilisation, nephrology, occupational health, orthopaedic and rehabilitation medicine.
PublicInvest said the acquisition would also be positive for IHH as PCMC’s prime location should help the healthcare operator gain a larger market share in medical tourism.
However, it noted that the earnings uplift for IHH following the acquisition was not material as it only makes up of about six per cent of the firm’s bottomline.
PCMC’s 277-licensed bed is only about two per cent of IHH’s total existing beds, it added.
Kenanga Research said PCMC is one of the key strategic private hospitals in the Klang Valley and expected to enable IHH to leverage on its wide network of hospitals to deliver potential synergies and offerings.
“The acquisition is expected to contribute less than one per cent to our FY20 earnings forecast and will only put a small dent to IHH’s net gearing of 0.2 times as at June 2019,” it added.