3 Investing Insights on IHH Healthcare Bhd

IHH Healthcare Bhd (SGX: Q0F) is the world’s second largest listed health care provider by market capitalisation.

The company has operations across nine countries, including China, India, and Singapore. In our Garden City, IHH’s hospitals include Mount Elizabeth, Gleneagles Singapore, Parkway East, and Mount Elizabeth Novena.

Here are three things I recently learnt about the company that may interest investors:

1. Revenue breakdown

IHH’s business results come from its interests in four different healthcare groups, one of which is the Singapore-listed health care real estate investment trust, Parkway Life REIT (SGX: C2PU).

Here’s the revenue breakdown for IHH in the first-quarter of 2016:

IHH revenue table
Source: IHH’s earnings release

Parkway Pantai and Acibadem Holdings contributed to 96% of IHH’s revenue as you can see from the table. The former has 26 hospitals in total in Singapore, Malaysia, and India at the end of 2015. Meanwhile, the latter has 18 hospitals in its portfolio as of end-2015, the bulk of which are located in Turkey (16); Acibadem has one hospital each in Macedonia and Iraq as well.

It is notable that Singapore is the top market for Parkway Pantai with 59.2% of revenue. This is followed by Malaysia at 25.3% and India at 8.3%.

2. Future plans

As of 31 March 2016, IHH has a portfolio of 10,000 hospital beds across 49 hospitals in nine countries. Moreover, the company also has a pipeline of over 3,000 beds to come.

For perspective, the next largest health care provider in Singapore’s stock market, Raffles Medical Group Ltd (SGX: BSL), currently has a 380-bed hospital in Raffles Hospital and is developing a 400 bed hospital in Shanghai, China.

IHH had given investors good clues on its focus in the near future. The company commented in its latest earnings release:

“Over the near term, given its rapid growth over the past few years, IHH will focus on enhancing its service offerings in existing hospitals, ramping up newer hospitals and integrating newly acquired assets.”

3. Valuation and growth

At IHH’s current price, it’s priced at over 52 times trailing earnings. For some context, the market’s price-to-earnings ratio is around 12 at the moment.

IHH’s profit attributable to shareholders have grown at a compound annual rate of 7.5% from 2012 to 2015. But, growth seems to have accelerated lately. In the first-quarter of 2016, the company’s bottom-line expanded by 37% to RM235 million.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn’t own shares in any companies mentioned.