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Nikkei Markets

IHH Healthcare's net profit skids on absence of one-off gain

Company to invest heavily to expand across markets, targets acquisitions

IHH Healthcar is expanding Pantai Hospital Kuala Lumpur, Ayer Keroh and Klang as well as a green-field project at Gleneagles Medini, which collectively cost 585.1 million ringgit. (Photo by Keiichiro Asahara )

KUALA LUMPUR (Nikkei Markets) - Malaysia's IHH Healthcare, Asia's largest hospital operator by market value, said Friday its net profit plunged 87.8% in the first quarter from a year earlier due to absence of one-off divestment gain.

Net profit for the three months ended Mar. 31 stood at 57.24 million ringgit ($14.38 million) compared with 470.05 million ringgit in the same quarter last year, IHH Healthcare said in an exchange filing. Year-ago net profit included one-off gain of 313.4 million ringgit from the Apollo Hospitals divestment.

The company backed by Malaysia's state investment fund Khazanah Nasional, said quarterly revenue rose 6.3% year-on-year to 2.85 billion ringgit from 2.68 billion ringgit.

"We continue to be on the lookout for value-accretive opportunities to expand into all markets," said IHH Healthcare Chief Executive Tan See Leng in a statement. The company is also looking at areas that can leverage on technology to improve healthcare delivery in the future, he said.

In the first quarter, IHH Healthcare saw inpatient admission volumes in Turkey grew 14.4% year-on-year, followed by India's 6.7% growth and Singapore's 2.7% growth, while Malaysia recorded a 0.6% on-year decline, a company statement said.

In terms of average revenue per inpatient admission, Turkey operation recorded a 14.4% increase, followed by Malaysia's 9.6%, India's 8.5% and Singapore's 5%, the statement posted on the company's website showed.

IHH Healthcare expects to invest 3 billion ringgit from the second quarter this year in hospital projects across all operating countries, which will help it add more than 1,700 beds.

The company is expanding Pantai Hospital Kuala Lumpur, Ayer Keroh and Klang as well as a green-field project at Gleneagles Medini, which collectively cost 585.1 million ringgit, the statement said.

In Hong Kong, the company will start a green-field project called Gleneagles Hong Kong Hospital that will cost 152 million ringgit. IHH Healthcare has a 60% ownership in the hospital.

In China, IHH Healthcare will launch two green-field projects and a brown-field project that is estimated to cost 1.26 billion ringgit in total. It is also planning to build a hospital in Myanmar that is expected to cost 331.8 million ringgit.

In Turkey, IHH Healthcare plans to invest 548.8 million ringgit to expand current facilities as well as building two new hospitals. It also plans to invest another 30 million ringgit in International Medical University.

"The group expects that the expansion projects in Malaysia, China and completion of ongoing projects in Turkey will provide sufficient capacity to meet demand, which will drive revenue growth," the company said.

The pre-operating costs and start-up costs of new operations are expected to partially erode its profitability during the initial stages, it added. "The group expects higher costs of operations arising from wage inflation as a result of increased competition for trained healthcare personnel in its home markets."

Shares in IHH Healthcare rose 1.3% to end at 6.26 ringgit apiece, while FTSE Bursa Malaysia ended 1.2% higher.

--Gho Chee Yuan

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