The 4 Different Ways IHH Healthcare Bhd Makes Its Money

IHH Healthcare Bhd (SGX: Q0F)(KLSE:5225.KL), which is dual-listed in Singapore and Malaysia, is one of the largest companies in both markets with its market capitalisation of nearly RM52 billion.

It is a provider of premium healthcare services in regions where the demand for quality healthcare is “growing rapidly,” such as Asia, Central & Eastern Europe, the Middle East, and North Africa.

Since its listing in Singapore’s stock market in 2012, IHH’s stock price has appreciated by 71% even when Singapore’s market barometer, the Straits Times Index (SGX: STI), has declined by 6% over the same period.

The company’s heft and market-beating performance may mean investors are curious about it. This prompted me to investigate how IHH Healthcare generates its income. Doing so can help investors better understand the company and its business model.

The following table shows IHH Healthcare’s revenue from its different business units from 2011 to 2015:

Source: IHH Healthcare 2015 annual report

Parkway Pantai happens to be the biggest revenue contributor to IHH Healthcare in 2015.

This business unit has a network of hospitals such as Mount Elizabeth Novena Hospital, Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital in Singapore, and Pantai Hospital Kuala Lumpur and Gleneagles Kuala Lumpur in Malaysia.

Internationally, Parkway Pantai has investments in hospitals in China, Hong Kong, India, Brunei, and Myanmar.

The next largest revenue contributor in 2015 is Acibadem Holdings. This business reported a network of 18 hospitals in 2015 – of which 16 are found in Turkey and one each are located in Macedonia and Iraq (the Iraq hospital is under a Health Management Agreement) – and 13 outpatient clinics.

Next we have the IMU Health business unit, which manages the International Medical University and International Medical College in Malaysia. As of 31 March 2015, International Medical University has an enrolment of 3,950 students and has trained about 7,000 students since its founding in 1992.

The smallest revenue contributor to IHH Healthcare in 2015 is the Singapore-listed real estate investment trust, Parkway Life REIT (SGX: C2PU). The REIT, which is managed by IHH Healthcare, reported a portfolio comprising 47 healthcare properties at end-2015; this has since expanded to 48 as of 30 September 2016. Parkway Life REIT is one of Asia’s largest listed healthcare REITs by asset size.

A Foolish Conclusion

As you can see, there are a number of moving parts with IHH Healthcare’s business. But, there is still one obvious theme among all the different business units – they are in the healthcare industry, which many market observers believe enjoy stable demand.

By breaking down IHH Healthcare’s revenue stream, investors can better evaluate the prospects of each business segment, which will allow them to form a better judgement on the prospects of the entire company.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.