KUALA LUMPUR: IHH Healthcare Berhad's earnings momentum is expected to accelerate, driven by increased revenue intensity and growing demand in the healthcare sector in the second half of the financial year 2024 (2HFY24), said Kenanga Investment Bank Bhd (Kenanga Research).
The research firm is maintaining its earnings forecasts for the healthcare provider and has rolled forward its valuation base from FY24 to FY25, following 1HFY24 results that met expectations at 46 per cent.
"Its 1HFY24 core net profit rose 30 per cent year-on-year, driven by revenue intensity, better yields, and a lower tax.
"We expect its earnings momentum to accelerate, underpinned by revenue intensity and rising demand in 2HFY24," it said in a research note.
The firm maintained an "outperform" call on IHH Healthcare with a higher target price of RM7.73 from RM7.
Kenanga Research said investors should now focus on earnings catalysts in FY24, such as the return of foreign patients in Türkiye and resolved nurse shortages in Singapore and Malaysia.
The firm added that IHH Healthcare saw improving margins arising from the disposal of underperforming assets and the return of patients from the Middle East and Central Asia to India.
It expected IHH Healthcare's revenue per inpatient growth of 12 to 16 per cent this year, while inpatient throughput growth around 9.0 to and bed occupancy rate (BOR) of 65 to 73 per cent for its hospitals in Malaysia, Singapore, India, and Türkiye.
"We believe the key growth factor for its inpatient throughput and BOR would be revenue intensity from a case-mix with more acute cases and medical tourists; the addition of new beds, which were previously constrained by staff shortages, is gradually easing.
"We expect sustained performance in Malaysia, while staff shortages in Singapore have been resolved," it added