Is China The Next Growth Engine Of IHH Healthcare Bhd?

IHH Healthcare Bhd (SGX: Q0F) announced this week that its joint-venture entity, ParkwayHealth Chengdu Hospital Company Limited (PCHC), has been granted a 20-year hospital licence in Chengdu, China

PCHC is 70% owned by IHH Healthcare with the remaining 30% stake held by its Chinese partner, Shanghai Broad Ocean Investments Co. Ltd.

IHH Healthcare already operates a hospital in China now, namely, the Shanghai International Medical Centre located in well, Shanghai. The hospital has 450 beds and is located in the Shanghai International Medical Zone.

The newly announced 20-year licence granted to PCHC would give IHH Healthcare the opportunity to establish another operating hospital in China.

China is a huge country and IHH Healthcare is not new to the medical industry in Chengdu. Through its ParkwayHealth brand, IHH Healthcare has been running medical clinics in Chengdu. The company also has plans for another hospital in Chengdu, the Gleneagles Chengdu Hospital.

That’s not all when it comes to IHH Healthcare’s China business. It actually has plans to develop the Gleneagles Shanghai Hospital too.

All that being said, China currently contributes only a small portion of IHH Healthcare’s revenue, although the new China-based projects could provide additional growth in the future.

The company still obtains the main bulk of its revenue from its operations in Singapore, Malaysia, and Turkey through its investment in Acibadem Holdings. And other than China, IHH Healthcare also has expansion projects going on or planned in Malaysia, Hong Kong, Myanmar, and Turkey.

IHH Healthcare is now trading at 49 times trailing earnings and offers a 0.5% dividend yield.

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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.