---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 346051
conversation_id: 6666e741-e650-452e-8edc-ed52a5bf522d
citations: 16
created: 2026-05-31 22:26:05Z
---

# Is CLSA incrementally more positive/negative on IHH. If so, why?

## CLSA on IHH Healthcare (IHH MK): Incrementally MORE POSITIVE — but only at the margin, rating still HOLD

CLSA (analysts Joe Liew / Jin Han Chin, Kuala Lumpur) has shifted from "cautious / worried about Malaysia pricing scrutiny" in January-February 2025 to "less worried" by June 2025. Direction of travel is **incrementally positive**, but the rating has stayed at **HOLD** through the entire window. The TP was nudged up once (March 12, 2025) from RM6.90 → **RM7.80**, and has been left at RM7.80 through the latest June 20, 2025 note.

### The trajectory

| Date | Doc | Rating | TP (RM) | Tone vs. prior |
|---|---|---|---|---|
| Jan 14, 2025 | Malaysia Healthcare — "2025 set to be a tumultuous year" | HOLD | 6.90 | Cautious — DRG scrutiny, "upside earnings surprises unlikely" [13][14] |
| Feb 24, 2025 | Malaysia Healthcare — "Scrutiny on hospital pricing" | HOLD | 6.90 | More cautious — flagged negative impact on pricing and margins [11][16] |
| Mar 12, 2025 | **IHH dedicated note — "Compelling longer term growth"** | HOLD | **6.90 → 7.80** | Mixed: Malaysia earnings cut, but model rolled forward; "longer-term growth attainable" [1][5] |
| Apr 20, 2025 | Malaysia Strategy — "Dissecting 2025 EPS growth" | HOLD | 7.80 | Still cautious — IHH consensus 2025 EPS cut −6.3%, one of biggest drags on KLCI EPS [15] |
| Jun 20, 2025 | Malaysia Private Hospitals — "Symposium takeaways" | HOLD | 7.80 | **Incrementally positive** — "we are now less worried about private hospital profits" [7][8] |

### Why the tone is improving — three reasons

**1) Regulatory tone shift on DRG / pricing intervention (the biggest swing factor)**
- In January, CLSA explicitly warned that DRG implementation would create "further scrutiny on private hospital groups' profits/margins/returns" and that "upside earnings surprises are unlikely" [13]. February's note reinforced that "scrutiny is likely to persist this year" with "a negative impact on private hospital pricing and margins" [11].
- By June 20, after attending the Sasana Symposium, CLSA reported the **Minister of Health implied a "carrot rather than stick" approach** to controlling medical inflation, which CLSA explicitly called "a positive development as it recognises the different stakeholders in private hospitals, especially capital providers" [7].
- The headline shifted explicitly from worry to comfort: *"We are now less worried about private hospital profits"* — citing both the minister's tone AND the fact that the **1Q25 results for IHH and Sunway "do not indicate downward pressure on margins yet"** [8].

**2) Better visibility into the geographic mix — Singapore turnaround and Acibadem/India strength**
- In the March 12 dedicated note, CLSA acknowledged Malaysia uncertainty but explicitly argued it would be "partially offset by strong performance in other geographical locations over 2025-27" [1].
- **Singapore**: Mount Elizabeth Orchard renovations should complete in 3Q25, with growth returning in 2026 and Singapore remaining a key contributor thereafter [3].
- **Turkiye and India**: FY24 Ebitda growth of +19% / +20% YoY respectively, driven by inpatient admissions and revenue intensity. CLSA expects **Acibadem to be the TOP Ebitda contributor by 2026CL** [4].
- CLSA also rolled forward the model to use **2026CL** (vs 2025CL previously) in the SOTP — a methodology choice that mechanically lifts TP because 2026CL earnings are forecast +12% above 2025CL [5][6].

**3) Longer-term framing remains constructive**
- CLSA flagged that for "investors who can take a longer term view, Ebitda growth of 10-15% per annum appears attainable" [5].
- Ebitda growth profile of **−3% / +12% / +11% over 2025-27CL** — i.e. trough is 2025; 2026 is recovery [1][6].

### What's still holding CLSA back from upgrading to BUY

- **Short-term earnings headwinds**: CLSA cut 25CL / 26CL core earnings by **−5% / −11%** in the March note to reflect Malaysia pricing pressure, calling out "short term earnings headwinds prevent us from becoming more constructive on the stock at this juncture" [5][6]. They also expect **Ebitda to decline 3.2% in 2025** [2].
- **Acibadem FX risk re-emerged in June**: "Recent weakness in the Turkish lira indicates that Acibadem earnings may be under pressure when converted to ringgit. Acibadem accounted for 32% of group revenue and 27% of group Ebitda in 1QFY25." [9]
- **Malaysia consensus EPS still being cut**: As of April 20, IHH 2025 consensus EPS had been cut **−6.3%** YTD (from 0.237 to 0.222), making IHH one of the five biggest contributors to the broader Malaysian EPS growth downgrade from 9.0% to 7.0% [12][15].
- **Valuation no longer a screaming bargain**: At RM6.85 (June 19, 2025), IHH trades at 13.4x 2025 EV/Ebitda — fair relative to Sunway at 22.4x but not cheap [10].

### CLSA's IHH base-case financials (March 2025 model)

| | 23A | 24A | 25CL | 26CL | 27CL |
|---|---|---|---|---|---|
| Revenue (RMm) | 20,935 | 24,383 | 26,252 | 29,561 | 33,080 |
| Net profit (RMm) | 2,952 | 2,657 | 2,286 | 2,516 | 2,998 |
| EPS (RM) | 0.15 | 0.19 | 0.23 | 0.25 | 0.31 |
| EPS growth (% YoY) | (7.5) | 31.6 | 17.9 | 11.6 | 21.7 |
| ROE (%) | 10.7 | 9.0 | 7.4 | 7.9 | 8.9 |
| EV/Ebitda (x) | 12.9 | 13.7 | 14.0 | 12.2 | 10.8 |

Source: CLSA model in 12-Mar-2025 dedicated note [6]

### Bottom line

**Yes, CLSA is incrementally more positive on IHH** — the trajectory has clearly improved from January's "tumultuous year / upside surprises unlikely" framing [13][14] to June's explicit "we are now less worried about private hospital profits" stance [7][8]. The improvement is driven primarily by (i) the Malaysian government signalling a softer "carrot vs stick" approach on hospital pricing reform, (ii) 1Q25 margin data confirming no pricing pressure has materialised yet, and (iii) the model-roll-forward to 2026CL benefiting from the Singapore renovation completion in 3Q25 and continued Acibadem/India strength. **But CLSA has NOT crossed the threshold to upgrade** — rating remains HOLD with TP RM7.80 (≈+14% upside at RM6.85), held back by Turkish lira FX risk on Acibadem (32% of revenue), residual Malaysia DRG overhang, and 2025 being a trough Ebitda year (−3.2% YoY).

*Coverage note*: IHH coverage at CLSA was transferred twice in late 2024 (Sue Lin Lim → Zhen Ye Khoo on 4-Nov-2024, then to Joe Liew on 2-Dec-2024) with no rating/TP changes at either transfer. The current lead analyst is **Joe Liew (joe.liew@clsa.com)** with Jin Han Chin, CFA as co-author, both based in Kuala Lumpur — i.e. this is genuine CLSA-parent coverage, not CLST. *Latest available CLSA note in our archive on IHH dates to 20-Jun-2025; reading "incremental" relative to that vintage.*

---
**Sources**
[1] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[2] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[3] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[4] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[5] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[6] IHH - HLD (Compelling longer term growth) — financials table — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[7] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[8] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[9] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[10] Malaysia Private hospitals (Symposium takeaways) — peer-comps table — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[11] Malaysia Healthcare (Scrutiny on hospital pricing) — CLSA (24 Feb 2025) — 607951450LinqAlpha.PDF
[12] Malaysia Healthcare (Scrutiny on hospital pricing) — CLSA (24 Feb 2025) — 607951450LinqAlpha.PDF
[13] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[14] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[15] Malaysia strategy (Dissecting 2025 EPS growth) — CLSA (20 Apr 2025) — 607956315LinqAlpha.PDF
[16] Malaysia Healthcare (Scrutiny on hospital pricing) — valuation table — CLSA (24 Feb 2025) — 607951450LinqAlpha.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] **607962474LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962474LinqAlpha.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] **607951450LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951450LinqAlpha.PDF>
- [12] **607948170LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607948170LinqAlpha.PDF>
- [13] **607948170LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607948170LinqAlpha.PDF>
- [14] **607956315LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956315LinqAlpha.PDF>
- [15] **607956315LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956315LinqAlpha.PDF>
- [16] **607951450LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951450LinqAlpha.PDF>

