---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 264373
conversation_id: 659ab2ad-b2ae-4714-aedc-3dfb93f1326d
citations: 12
created: 2026-05-31 22:27:00Z
---

# What’s the bull case bear case for IHH?

# IHH Healthcare (IHH MK) — Bull Case / Bear Case

**Snapshot (per CLSA, 20 Jun 2025):** Price RM6.85, 12-month TP RM7.80 (+13.9% upside), Market cap US$14.2bn, Rating **HOLD** [12]. Major shareholders Mitsui & Co 32.8% and Khazanah 25.9% [7]. The internal house view (CLSA Malaysia, Joe Liew) is unambiguously balanced: *longer-term growth is compelling, but near-term earnings headwinds and the Acibadem/lira overhang prevent constructive positioning today* [2].

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## Bull Case — "Compelling longer-term growth, cheapest regional play"

| Pillar | Substance |
|---|---|
| **Multi-country diversification** | Exposure across Singapore, Malaysia, India (Fortis), Türkiye/Europe (Acibadem) and Greater China — positioned as the cheapest regional hospital play vs. APAC peers [5][12]. |
| **Singapore growth restart in 2026** | Mount Elizabeth Orchard renovations complete in 3Q25; Singapore earnings expected to bounce back strongly in 2026 and remain a key group contributor [4]. |
| **India & Türkiye executing** | In FY24, IHH India and IHH Türkiye & Europe delivered EBITDA growth of **+20%** and **+19% YoY** respectively, driven by higher inpatient admissions and revenue intensity. Acibadem is forecast to become the **top group EBITDA contributor by 2026CL** [5]. Fortis is rolling up Punjab via the Shrimann Superspecialty acquisition (cluster strategy) [5]. |
| **Reaccelerating earnings trajectory** | CLSA models EBITDA dipping -3.2% in 2025 then re-accelerating **+12% (2026)** and **+11% (2027)**; revenue from RM24.4bn (2024) → **RM33.1bn (2027)**; EPS growth +17.9% / +11.6% / +21.7% across 25/26/27CL [1][6]. |
| **Long-duration compounding** | Joe Liew explicitly notes "for investors who can take a longer term view, **Ebitda growth of 10-15% per annum appears attainable**" [2]. |
| **Strong FCF inflection** | Free cashflow forecast to **double from RM1.16bn (2024) → RM2.31bn (2025) → RM3.49bn (2026) → RM4.08bn (2027)** as capex normalises; net debt/equity falls from 33.9% to 19.5% by 2027CL [6]. |
| **De-rating cushion vs. peers** | EV/EBITDA derates from **13.4x (2025) to 11.7x (2026)** — versus Sunway at 22.4x/20.5x and KPJ at 14.2x/13.3x, IHH is the cheapest of the Malaysian-listed hospital trio on EV/EBITDA [11]. |
| **Malaysia regulatory risk less acute than feared** | At the Sasana Symposium (Jun 2025), the Health Minister signalled a "carrot rather than stick" approach; private hospitals remain **exempt from DRG** for now, and 1Q25 results showed **no margin pressure yet** at IHH/Sunway [8][9]. |
| **Catalysts** | EBITDA margin uplift, accretive expansion (greenfield + M&A), and resolution of legal/litigation overhang in India [5]. |

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## Bear Case — "Near-term earnings cuts; FX and political overhangs"

| Pillar | Substance |
|---|---|
| **Malaysia pricing scrutiny → 25CL EPS cuts** | CLSA cut 25CL / 26CL core earnings by **-5% / -11%** on insurance-driven pricing pressure; FY25 EBITDA expected to decline -3.2%; the PAC parliamentary hearings on private hospital pricing will only present findings to Dewan Rakyat in 2H25, sustaining headline risk [1][3][6]. |
| **DRG / insurer-led discount risk** | Even with DRG implementation delayed for private hospitals, insurers (50–60% of private hospital revenue in Malaysia) are pressing for material discounts; CLSA cites this uncertainty lasting throughout 2025 [3]. |
| **Acibadem currency translation** | Acibadem = **32% of group revenue and 27% of group EBITDA in 1QFY25**. Turkish lira weakness (the TRY has depreciated materially) directly pressures ringgit-translated earnings — flagged as the principal reason CLSA stays at HOLD despite the Malaysia overhang easing [10]. |
| **Margin compression** | Group EBITDA margin compresses from **27.1% (2023) → 23.6% (2024) → 21.3% (2025CL)** and stays in the low-21% range out to 2027 — a >550bp peak-to-trough reset [6]. |
| **Returns trough in 2025** | **ROE falls from 10.7% (2023) → 7.4% (2025CL)**, recovering only modestly to 8.9% by 2027; ROIC bottoms at 6.3% in 2025 [6]. |
| **Net profit declines for two consecutive years** | Net profit -10% YoY in 2024 and another **-13.9% in 2025CL** (RM2.66bn → RM2.29bn) before growth returns [6]. |
| **Execution / gestation risk** | Slower post-Covid recovery, extended gestation for greenfield/brownfield hospitals, and earnings/execution risk from planned M&A are the named downside risks [5]. |
| **Valuation already prices the inflection** | Stock +19.1% over the trailing 12 months (in absolute terms) into the note; with only +8% to +13.9% upside to the RM7.80 TP, the longer-term thesis is partially in the price — the rationale for HOLD rather than O-PF [7][12]. |

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## Key financial trajectory (CLSA estimates, RMm)

| Year to 31 Dec | 2023A | 2024A | 2025CL | 2026CL | 2027CL |
|---|---|---|---|---|---|
| Revenue | 20,935 | 24,383 | 26,252 | 29,561 | 33,080 |
| Op EBITDA | 5,669 | 5,764 | 5,581 | 6,264 | 6,939 |
| Net profit | 2,952 | 2,657 | 2,286 | 2,516 | 2,998 |
| EPS (RM) | 0.15 | 0.19 | 0.23 | 0.25 | 0.31 |
| EBITDA margin (%) | 27.1 | 23.6 | 21.3 | 21.2 | 21.0 |
| ROE (%) | 10.7 | 9.0 | 7.4 | 7.9 | 8.9 |
| EV/EBITDA (x) | 12.9 | 13.7 | 14.0 | 12.2 | 10.8 |
| Net debt/equity (%) | 18.6 | 33.9 | 31.9 | 26.5 | 19.5 |

Source: CLSA [6]

---

## Bottom line

The **bull / bear is asymmetric across time horizons**: short-term (2025) is structurally negative (-13.9% YoY net profit, multi-quarter Malaysia overhang, lira translation risk), while 2026-27 looks structurally positive (Singapore reopening, Acibadem becoming the #1 EBITDA contributor, India compounding, FCF inflection). That is precisely why CLSA's stance is HOLD with a constructive long-term editorial — they want longer-duration investors to own it, but see no compelling near-term catalyst at current levels [1][2].

---
**Sources**
[1][2][3][4][5][6][7] *IHH - HLD (Compelling longer term growth)* — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[8][9][10][11][12] *Malaysia Private hospitals (Symposium takeaways)* — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF

## Citations

- [1] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [2] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [3] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [4] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [5] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [6] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [7] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [8] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.PDF>
- [9] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.PDF>
- [10] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.PDF>
- [11] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.PDF>
- [12] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.PDF>

