KUALA LUMPUR (Oct 17): RHB Investment Bank (RHB IB) has maintained its “buy” call on IHH Healthcare Bhd at RM5.95 with an unchanged target price of RM6.90 and said it was pleasantly surprised by IHH’s advanced medical facilities at the Acibadem hospitals in Turkey.

In a note on Tuesday, the research house said that overall, it still liked IHH for its solid execution strategy and reputable regional footprint across key regions, driven by its strong brand awareness and affluent clientele.

RHB IB said the Acibadem segment accounted for 24% of IHH’s revenue in 2022, and it spiked to 30% in 2Q2023, attributable to the commencement of the Atasehir Hospital (Sept 2022) and the acquisitions of Ortopedia Hospital (Aug 2022) and Kent Group (Feb 2023).

Its optimistic outlook is also driven by the escalating Turkish healthcare spending at a 24.2% CAGR between 2016 and 2021, caused by a spike in non-communicable and chronic diseases such as cancer, diabetes, and chronic respiratory diseases.

“We make no changes to our estimates. Our SOP-derived TP remains at RM6.90 and implies 15x FY24F EV/Ebitda, in line with its five-year historical mean.

“Key downside risks include a mandatory takeover offer (MTO) overhang on Fortis, lower-than-expected patient volume and revenue intensity, and higher-than-expected operating costs,” it said.