IHH eyes upside with Turkiye hospital acquisition
BIMB Research in a report said Turkiye's largest hospital operator, Acibadem, which is majority-owned by IHH Healthcare Bhd, is operating at 75% occupancy.
Revenue in the first quarter of financial year 2025 (1Q25) per inpatient admission rose 16% year-on-year on a constant currency basis to RM12,355, driven by a more acute case mix.
'Inpatient admissions totalled 44,311 in 1Q25, with foreign patients contributing 13% of revenue.'
The research house said earnings before interest, taxes, depreciation and amortisation (Ebitda) for Turkiye came in at RM362mil, with a 300 basis points margin drop due to pre-operating costs from Acibadem Kartal and Vitosha, as well as Ramadan seasonality.
Looking ahead, growth will be supported by the Bayındır acquisition.
'The Bayındır acquisition brings urban market exposure and potential procurement and operational synergies, and is supported by a pipeline to add 1,030 beds (circa additional 16%) by 2028, in line with rising demand for quality healthcare.'
Acibadem announced earlier this week that it had agreed to buy an 80% stake in Bayındır Hospitals from Is Bankasi for US$55mil (RM232.2mil).
BIMB Research said the acquisition offers Acibadem immediate capacity expansion, access to new catchment areas, and synergies in procurement and clinical standards, while also tapping into Turkiye's growing healthcare demand, supported by demographic trends and government initiatives.
'Retaining Turkiye Is Bankasi as a minority shareholder reduces political and operational risks while leveraging its local expertise.
'This transaction also strengthens IHH's diversification outside Malaysia, increasing its resilience against market-specific shocks.'
BIMB Research said the financial impact to IHH in the near term is likely modest due to the relatively small scale of Bayındır's operations within the group.
'Integration risks remain, especially in aligning systems, regulatory compliance, and corporate culture.
'The deal comes amid continued Turkyish lira volatility, which may affect earnings translation. Nonetheless, the acquisition price appears reasonable given the asset scale and strategic location, though further disclosures on Bayındır's revenue, Ebitda and occupancy rates would help in refining our forecasts.'
The research house is maintaining a 'buy' call on IHH with an unchanged target price of RM8.60.
'At this stage, we maintain our financial year 2025 (FY25) to FY26 forecasts pending completion and integration updates.
'The acquisition supports IHH's long-term growth profile but does not immediately alter earnings trajectory.
'Key monitors include post-merger performance, patient volumes, margin trends, and foreign exchange management.
'Given the group's strong balance sheet and execution track record in cross-border acquisitions, we view the move as a strategic positive but will reassess our target price upon receiving more financial details from management.'
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