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What Are The 3 Growth Avenues For IHH Healthcare Bhd?

IHH Healthcare Bhd (SGX: Q0F) (KLSE:5225.KL) is one of the largest healthcare companies in the world. It currently has a market capitalization of around RM52.7 billion (S$17.6 billion).

The company operates hospitals and other healthcare centres mainly in Turkey, Malaysia, and Singapore.

It also happens to be one of the most highly-valued companies listed in Singapore’s market given its price-to-earnings ratio of nearly 50 and paltry dividend yield of 0.5%.

Is the high valuation of IHH Healthcare justified? We can gain some clarity by finding out how the company can grow going forward.

Higher inpatient admissions

IHH Healthcare can improve its inpatient admissions at its existing assets. In fact, the company has seen strong inpatient admission volume growth for all its major segments in its latest quarter, the three months ended 30 September 2016.

For instance, its Parkway Pantai business unit’s Singapore hospitals saw inpatient admissions increase 13.6% year-on-year in the quarter. Over the same period, its Acibadem Holdings business grew inpatient admissions by an even more impressive 47.9%.

Just by utilizing its existing assets in a better way, IHH Healthcare could still grow its business significantly.

Expansion projects

IHH Healthcare currently has plans to develop more hospitals around the world and expand some of its existing hospitals.

The company has five projects right now that are projected to be completed by 2017. There are also other hospital developments that are in the pipeline, with projected completion dates of up till 2020.

Acquisitions

With its possession of over 10,000 operational beds and its status as the second-largest listed healthcare group in the world, IHH Healthcare has huge leverage when it comes to finding acquisition targets.

The company recently completed its acquisition of Continental & Global Hospitals in India and the Tokuda & City Clinic Groups in Bulgaria. With a relatively strong balance sheet and strong operating cash flow, the company should be able to accommodate more acquisitions in the future.

Foolish Summary

IHH Healthcare has seen its revenue and net profit grow at an anunal pace of 26.2% and 25.7%, respectively, from 2011 to 2015. Now it is for investors to determine if the company is able to sustain its high growth rates going forward.

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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 writer Stanley Lim doesn’t own shares in any companies mentioned.