---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 218938
conversation_id: 2bef4b09-1922-4c06-8cc2-504323eca606
citations: 10
created: 2026-05-31 22:24:59Z
---

# How does IHH’s valuation compare to peers, and what justifies its premium/discount?

# IHH Healthcare — Valuation vs. Peers and Discount/Premium Drivers

CLSA covers IHH (IHH MK, Q0F SP) with a **HOLD** rating, target price **RM7.80** (vs. last close RM6.85, ~14% upside) and explicitly characterises it as **"the cheapest regional hospital play vs. peers"** [5][9]. The valuation gap is real and material, but is largely justified by lower returns, geographic risk exposure, and a regulatory overhang in Malaysia. Detail below.

---

## 1. Where IHH trades vs. APAC hospital peers

Most recent CLSA regional peer-comp table (prices as of 19 June 2025) [1]:

| Company | Country | Rec | EV/EBITDA 25 | EV/EBITDA 26 | EV/EBITDA 27 | EBITDA margin 25 | EBITDA growth 25 | ROE 25 |
|---|---|---|---:|---:|---:|---:|---:|---:|
| **IHH Healthcare** | Malaysia | **HLD** | **13.4x** | **11.7x** | **10.3x** | 21.3% | (3.2)% | 7.4% |
| Sunway | Malaysia | HLD | 22.4x | 20.5x | 18.9x | 14.2% | 13.5% | 8.0% |
| KPJ Healthcare | Malaysia | n.a. | 14.4x | 13.5x | 12.6x | 24.1% | 9.0% | 14.5% |
| Apollo Hospitals | India | O-PF | 32.3x | 23.4x | 19.0x | 14.2% | 30.8% | 19.8% |
| Max Healthcare | India | O-PF | 50.6x | 40.8x | 33.8x | 26.4% | 19.1% | 13.5% |
| Fortis Healthcare | India | n.a. | 29.6x | 24.5x | 21.2x | 22.2% | 25.3% | 10.7% |
| Global Health (Medanta) | India | HLD | 35.3x | 28.6x | 24.0x | 24.0% | 3.8% | 16.3% |
| Dr Lal PathLabs | India | O-PF | 33.0x | 28.3x | 24.1x | 27.5% | 13.6% | 21.1% |
| BDMS | Thailand | O-PF | 12.1x | 11.3x | 10.4x | 24.4% | 4.8% | 15.9% |
| Bumrungrad (BH) | Thailand | O-PF | 10.4x | 10.0x | 8.6x | 37.0% | (6.3)% | 24.3% |
| Ramsay Health Care | Australia | HLD | 8.0x | 7.5x | 6.7x | 9.4% | 5.5% | 6.0% |
| Siloam | Indonesia | n.a. | 9.1x | 8.1x | 7.3x | 23.6% | 29.3% | 14.4% |
| Mitra Keluarga | Indonesia | O-PF | 18.8x | 17.2x | – | 34.5% | 6.3% | 18.8% |
| Raffles Medical | Singapore | O-PF | 11.2x | 10.1x | 9.2x | 17.1% | 8.5% | 6.4% |
| **Peer Average** | | | **21.5x** | **18.2x** | **14.7x** | 22.8% | 11.4% | 14.1% |

Headline gap: **IHH at 11.7x 26CL EV/EBITDA trades at a ~36% discount to the peer average of 18.2x**, and at almost one-quarter the multiple of the most expensive Indian comps (Max at 40.8x, Global Health at 28.6x) [1]. The earlier March-2025 IHH-specific note shows the same picture (IHH 12.3x 26 vs. peer avg 17.9x) [2].

CLSA's own SOTP target of RM7.80 implies just **13.0x 24CL EV/EBITDA** for IHH [3], and the TP itself sits **>0.5SD below IHH's own 5-year EV/EBITDA mean** [6].

---

## 2. SOTP — what each part of IHH is worth

CLSA's most recent SOTP (RM68.7bn equity value, RM7.80/share) [4]:

| Segment | Stake | EV (RMm) | Multiple applied |
|---|---:|---:|---|
| Singapore (Mount Elizabeth / Gleneagles / Parkway) | 100% | 26,882 | 15x 26CL EV/EBITDA (mean) |
| Malaysia (Pantai / Gleneagles) | 100% | 14,677 | 13x 26CL EV/EBITDA (mean) |
| Türkiye (Acibadem) | 90% | 9,239 | 7x 26CL EV/EBITDA (-1SD) |
| India (Fortis) | 31% | 4,099 | 15x 26CL EV/EBITDA (-1SD large India) |
| Greater China (Gleneagles HK) | 70% | 550 | 6x 26CL EV/EBITDA (-1SD HK) |
| Total EV | | **55,448** | |
| Plife REIT stake | 36% | 3,515 | Bloomberg consensus, SGD:MYR @ 3.50 |
| Net cash | | 9,762 | 26CL net debt |
| **Equity value** | | **68,724** | Implies **RM7.80** |

The methodology explicitly **uses the long-term mean for Singapore and Malaysia, but -1SD multiples for Türkiye, India and Greater China** [6] — i.e., CLSA itself is applying a haircut to roughly 25% of the group's EBITDA mix, which is the single biggest mechanical reason IHH screens cheap on a group-average basis.

---

## 3. What justifies the discount

### 3.1 Structurally lower ROE
IHH's ROE of **7.4% (25CL)** is roughly half the peer average (14.1%) [1]. ROE only inches up to 7.9% / 8.9% by 26-27CL. By contrast, Indian peers (Apollo 19.8%, Dr Lal 21.1%) and Thai peers (BH 24.3%, BDMS 15.9%) deliver materially higher capital efficiency. On a Gordon-growth lens, lower sustainable ROE for the same g justifies a lower P/B and EV/EBITDA — most of the "discount" is mechanical, not anomalous.

### 3.2 Acibadem / EM-FX exposure
**Türkiye contributes 32% of group revenue and 27% of group EBITDA in 1QFY25**, and the Turkish lira had already depreciated **15.2% YTD against MYR by June 2025** [1]. CLSA discounts Acibadem at -1SD (7x EV/EBITDA) precisely because Turkish hospital comps consistently trade at a structural discount to Asian peers due to FX translation risk and hyperinflation accounting noise [4][9].

### 3.3 Malaysia regulatory overhang
1QFY25 Malaysia EBITDA was -3.2% YoY [2]. CLSA flags multiple Malaysian-specific drags:
- Pending DRG (diagnosis-related group) payment system implementation that would cap reimbursement;
- Public Accounts Committee scrutiny of hospital pricing;
- Insurance-driven pressure on revenue intensity (insurers account for 50-60% of private-hospital revenue and are pushing for material discounts) [7].

This drove CLSA to **lower the Malaysia segment SOTP valuation specifically** in the March-2025 update [7].

### 3.4 Earnings revisions are still going the wrong way
CLSA cut 25CL/26CL core net profit by **-5% / -11%** in March 2025 [7]. 25CL EBITDA growth is **-3.2%**, materially below peer average of 11.4% [1]. Earnings momentum has to inflect before the multiple can re-rate.

### 3.5 Singapore renovation drag
Mount Elizabeth Orchard renovations reduced Singapore capacity ~50% during the work, with earnings only normalising from 3Q25 and clearer recovery in 2026 [2]. This temporarily mutes the highest-quality segment in the SOTP.

### 3.6 Execution / legal overhang
Key risks flagged by CLSA: extended gestation period for greenfield/brownfield expansions; M&A integration risk; FX exposure to TRY/INR [8]. Legal issues in India (Fortis) remain unresolved and are an explicit catalyst on resolution rather than something already in the price [10].

---

## 4. What would close the gap (CLSA's listed catalysts)

CLSA names three concrete catalysts that could justify a higher multiple [10]:
1. **Sustained uplift of EBITDA margins** in key operations (group EBITDA margin 21.3% → 21.0% over 25-27CL [1] — i.e., they are NOT yet underwriting margin expansion).
2. **Accretive expansion** — Acibadem to add 195 beds in Bulgaria + ~900 beds across Türkiye in 2026-28; IHH India to add ~1,910 beds by 2028.
3. **Resolution of Indian legal issues** at Fortis.

On a longer view, CLSA says **10-15% p.a. EBITDA growth is attainable** for IHH [2], which would meaningfully widen the gap between current and warranted multiple.

---

## 5. Bottom line

IHH does trade at a real discount — roughly **35-40% below the APAC hospital peer average on 26CL EV/EBITDA** [1] — but the discount is **largely warranted**, not a free lunch:

- Half the ROE of the average peer (7.4% vs. 14.1%) [1];
- 27% of EBITDA in Türkiye, with lira down 15.2% YTD [1];
- Malaysia (~19% of group earnings) under active regulatory scrutiny and insurer pricing pressure [7];
- Earnings revisions still negative (25/26CL core cut -5%/-11%) [7];
- 25CL EBITDA growth of -3.2%, well below peer average +11.4% [1].

The case for owning IHH is the longer-dated reflation — Singapore capacity coming back in 2026, Acibadem and India bed pipelines, plus genuine optionality from regulatory clarity in Malaysia and Fortis litigation resolution. Until that thesis starts to print in numbers, CLSA's HOLD/RM7.80 (~14% upside, with the TP itself >0.5SD below IHH's 5-year mean [6]) is the consistent framing — cheap, but appropriately cheap.

---

**Sources**
[1] Malaysia Private hospitals — Symposium takeaways — CLSA (20 Jun 2025) — Regional peer comp table — 607962474LinqAlpha.PDF
[2] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — Peer comp table — 607952899LinqAlpha.PDF
[3] Malaysia Private hospitals — Symposium takeaways — CLSA (20 Jun 2025) — IHH SOTP table — 607962474LinqAlpha.PDF
[4] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — New SOTP table — 607952899LinqAlpha.PDF
[5] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — Investment thesis — 607952899LinqAlpha.PDF
[6] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — Valuation details — 607952899LinqAlpha.PDF
[7] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — SOTP roll-forward commentary — 607952899LinqAlpha.PDF
[8] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — Investment risks — 607952899LinqAlpha.PDF
[9] Malaysia Private hospitals — Symposium takeaways — CLSA (20 Jun 2025) — IHH thesis + risks — 607962474LinqAlpha.PDF
[10] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — Catalysts — 607952899LinqAlpha.PDF

## Citations

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

