KUALA LUMPUR: IHH Healthcare Bhd's net profit and revenue in the second quarter (Q2) and first half (1H) ended June 30, 2022, came in within both Hong Leong Investment Bank Bhd's (HLIB Research) and consensus estimates at 49 per cent and 52 per cent respectively.
The bank-backed research firm said the 1H FY22 net profit was arrived at after stripping out the effects of hyperinflationary adjustment in Turkey (following the application of MFRS129) and adjusting for exceptional items (EIs) – which both collectively amount to RM256.5 million.
The firm said that despite patient volume chalking up strong growth across most segments, IHH's revenue only saw a mere two per cent improvement as stronger patient volume was offset by weaker revenue per inpatient in Malaysia and India.
"We believe the weaker revenue intensity resulted from patients returning to seek elective treatments post-pandemic.
"Despite the slight improvement in topline, core net profit was five per cent lower due to higher other operating expenses," it said in a note today.
HLIB Research said IHH's revenue growth of four per cent was predominantly due to a low base effect, as some of its key markets experienced lockdown restrictions in 1H FY21, which has deterred patients from seeking elective treatments.
"This is also reflected in its inpatient numbers, whereby Malaysia, India and Acibadem all charted the growth of 25 per cent, six per cent and 11 per cent, respectively.
"Continuous ramp up of Gleneagles Hong Kong and acquisitions of DDRC SRL and Bel Medic also contributed to the topline growth.
"All in, net profit also grew at a similar magnitude of six per cent," it added.
HLIB Research expects IHH's performance going forward to be underpinned by the return of both local and foreign patients, which should help cushion the impact of lower Covid-related revenues.
"Inflationary pressures are also expected to impact IHH, but we think that the prices could be adjusted accordingly to protect the sustainability of the business," it said.
HLIB Research has maintained its 'Buy' call on IHH, with an unchanged target price of RM7.75.