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Nikkei Markets

IHH Healthcare swings to profit on revenue surge

Seeks to further consolidate multi-country footprints to diversify income

KUALA LUMPUR (Nikkei Markets) -- IHH Healthcare, Asia's biggest hospital operator by market value, swung to a third quarter net profit on the back of a surge in revenue, and a sharp slump in finance costs and operating lease expenses.

Net profit for the three months ended September stood at 236.34 million ringgit ($56.7 million) compared with a loss of 104.07 million ringgit a year ago, IHH Healthcare said in an exchange filing. Finance costs plunged 85%, while operating expenses shrank 61%, the company said.

Quarterly revenue surged 34% to 3.79 billion ringgit helped by a strong growth in existing operations and contribution from new hospitals, it said.

IHH will further consolidate its multi-country portfolio strategy to diversify its earnings base in cash-generating markets such as Singapore and Malaysia, capture medium-term growth momentum from Turkey and long-term growth opportunities from India and Greater China, the company said.

IHH - which operates over 15,000 beds in 80 hospitals across 10 countries - has been expanding into developing economies such as India and China, where large population and rapidly rising income are driving demand for quality healthcare and advanced treatment.

Apart from building hospitals, the company has been acquiring medical facilities at home and abroad. In Malaysia, IHH announced the acquisition of Prince Court Medical Centre for 1.02 billion ringgit to tap further into the medical tourism market.

In November 2018, IHH took control of India's Fortis Healthcare in a bitterly-fought long drawn out takeover battle. However, the acquisition is caught in the quagmire of legal troubles amid allegations of fraud against its founders.

Expansion abroad however carries its own risks, the company acknowledged. "The group is susceptible to geopolitical risks and currency volatility" given its footprint across Asia as well as Central and Eastern Europe, the Middle East and North Africa, IHH said.

"In particular for Turkey, we expect the ongoing political uncertainty to weigh on the economic activity of the country, which will result in currency fluctuations," the company added.

Shares of IHH Healthcare ended Friday 0.2% lower at 5.37 ringgit ahead of the results announcement, while the benchmark FTSE Bursa Malaysia KLCI closed down 1.4%.

-- Jason Ng

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