How Profitable Are IHH Healthcare Bhd’s Different Businesses?

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.

Recently, I had taken a look at the revenue contributions of IHH Healthcare’s different business units. As a quick recap, the company has four business units, namely, Parkway Pantai, Acibadem Holdings, IMU Health, and Parkway Life REIT (SGX: C2PU).

I thought it could be interesting to follow up with a look at the profitability of each segment. More specifically, I want to understand how much profit each unit is generating per dollar of revenue earned. The metric I want to look at is the EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin.

Here’s a table showing each business unit’s revenue, EBITDA, and EBITDA margin in 2015:

Source: IHH Healthcare 2015 annual report

Some of you may be wondering about Parkway Life REIT’s EBITDA margin which is in excess of 100%. This is due to the REIT’s fair value gains for its investment assets, which are not included in its revenue number.

It may also be useful to try and find out why the different units have different margins – that’s especially so for Parkway Pantai and Acibadem Holdings, which are in a very similar business of essentially running hospitals.

Understanding the profitability of each of IHH Healthcare’s business can also help investors form a better judgement on the long-term 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.