---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 274784
conversation_id: 0da3e2af-4963-4260-a733-cdcd53bf5390
citations: 14
created: 2026-05-31 22:25:13Z
---

# What is the investment thesis for IHH in the current market environment?

# IHH Healthcare (IHH MK) — Investment Thesis in the Current Environment

**CLSA View: HOLD | Target Price: RM7.80 | Priced 11 March 2025 at RM7.24 (~+8% potential)**
*Source: CLSA, "IHH — HLD (Compelling longer term growth)", 12 March 2025; corroborated by CLSA Malaysia Healthcare and Symposium notes through June 2025.*

---

## 1. Core Thesis — Pan-Asian Hospital Proxy at a Discount

IHH is positioned as the **cheapest regional hospital play vs. peers** and a **diversified proxy for Asian private healthcare** across four home markets — Malaysia, Singapore, India and Türkiye [1]. Management's strategy rests on five pillars:

- **Organic expansion** in existing markets (bed adds, brownfield)
- **Healthcare-continuum extension** (labs, ambulatory care, education)
- **New growth engines** (digital, diagnostics)
- **Value-accretive M&A** in existing and new geographies
- **Turnaround of underperforming assets** (primarily China) to unlock value [1]

The discount is meaningful: IHH trades at **14.1x / 12.3x / 10.8x 2025/26/27 EV/EBITDA vs. the regional peer average of 21.0x / 17.9x / 13.6x** — a ~30–40% discount despite double-digit EBITDA growth in two of three forecast years [11].

| Peer | Country | Rec | 2025 EV/EBITDA | 2026 EV/EBITDA | 2026 EBITDA growth |
|---|---|---|---:|---:|---:|
| **IHH Healthcare** | Malaysia | HLD | **14.1x** | **12.3x** | **+12.2%** |
| Sunway | Malaysia | HLD | 21.8x | 20.0x | +7.0% |
| KPJ Healthcare | Malaysia | n.a. | 14.5x | 13.5x | +0.1% |
| Apollo Hospitals | India | O-PF | 28.4x | 20.5x | +35.6% |
| Max Healthcare | India | O-PF | 42.5x | 34.1x | +23.5% |
| Fortis Healthcare | India | n.a. | 30.8x | 25.3x | +0.2% |
| Bangkok Dusit | Thailand | O-PF | 13.4x | 12.5x | +6.9% |
| Bumrungrad | Thailand | O-PF | 13.6x | 13.2x | +1.1% |
| Ramsay Health | Australia | HLD | 7.8x | 7.3x | +4.8% |
| Raffles Medical | Singapore | O-PF | 11.2x | 10.1x | +7.2% |
| **Peer Average** | | | **21.0x** | **17.9x** | **+10.3%** |

[11]

---

## 2. The "Patient Money" Argument — 10–15% EBITDA CAGR if You Can Stomach 2025

CLSA's stance is HOLD on near-term headwinds, **but explicitly flags that for investors with a longer-term horizon, EBITDA growth of 10–15% per annum is attainable** [2]. The forecast trajectory is U-shaped:

| Metric | 2025CL | 2026CL | 2027CL |
|---|---:|---:|---:|
| Revenue growth | +7.7% | +12.6% | +11.9% |
| **EBITDA growth** | **–3.2%** | **+12.2%** | **+10.8%** |
| Core earnings change vs. prior estimates | –5% | –11% | n/a |

CLSA cut 25CL/26CL core earnings by –5%/–11% respectively but rolled the SOTP forward to 2026CL, lifting TP from RM6.90 to RM7.80 [3]. **2025 is the trough year**; 2026–27 is when the thesis re-engages [3].

### Geographic EBITDA Mix (RMm)

| Segment | 2024A | 2025CL | 2026CL | 2027CL |
|---|---:|---:|---:|---:|
| Singapore | 1,825 | 1,653 | 1,792 | 1,855 |
| Malaysia | 1,060 | 1,016 | 1,129 | 1,277 |
| India | 723 | 799 | 877 | 952 |
| North Asia (Greater China) | 145 | 155 | 197 | 242 |
| **Acibadem (Türkiye & Europe)** | **1,458** | **1,720** | **2,022** | **2,355** |
| PLife REIT + Others | 230 | 240 | 250 | 260 |
| **Total** | **5,439** | **5,581** | **6,264** | **6,939** |

[14] — **Acibadem becomes the #1 EBITDA contributor from 2026 onward**, eclipsing Singapore.

---

## 3. Segment-by-Segment Drivers

### Malaysia — The Near-Term Drag
- IHH Malaysia delivered a strong FY24 (EBITDA +13% YoY, margin 25.5%, +600 beds added including Timberland in Sarawak and Island hospitals; inpatient admissions +7% YoY) [4].
- **The overhang**: insurance firms demanding discounts of **10–40%**, plus uncertainty around the now-shelved DRG (diagnosis-related group) payment system. Public Accounts Committee (PAC) hearings won't present findings until 2H25 [4][13].
- CLSA cut 2025 average revenue intensity assumption from 0% to –5% YoY and now models a –3.2% EBITDA decline for IHH Malaysia in 2025 [13].
- June 2025 update from the Sasana Symposium was mildly positive — the Health Minister signaled a "carrot rather than stick" approach toward private hospitals on medical inflation, recognizing capital-provider interests; **CLSA maintained HOLD on IHH and Sunway** post-symposium.

### Singapore — Renovation Trough, Then Snap-Back
- Mount Elizabeth Orchard renovations have reduced bed capacity by **~50%**, yet Ebitda only fell 40bps YoY in 4Q24 to a 28.2% margin thanks to bed turnaround optimization and capacity redirected to other hospitals [5].
- **Completion 3Q25; ramp-up from there. 2025 weak, recovery clearly visible in 2026** — Singapore stays a core post-2026 earnings engine [5].

### Acibadem (Türkiye + Europe) — The Growth Engine
- FY24 EBITDA **+19% YoY** (4Q24 +16%), driven by **revenue intensity +21.6% YoY** despite pre-operating costs for new greenfield assets [6].
- Türkiye macro stabilizing (lira and inflation moderating); FY24 occupancy at ~70%.
- Capacity adds: **130 beds in 2025, 900 beds in 2026–28** (mix of greenfield + brownfield; Acibadem Kartal opened 17 Feb 2025). Bulgaria greenfield (195 beds) opens end-1Q25; Rotterdam brownfield in pipeline [6].
- CLSA forecasts Acibadem EBITDA growth of **+18.0% / +17.5%** in 2025/26 [6].

### India — Quietly Compounding
- FY24 EBITDA **RM723m (+20% YoY)**, margin 17.9% on acute case-mix and revenue-intensity gains [7].
- **+1,910 beds to be added by 2028** (400 added in FY24). Fortis recently acquired Shrimann Superspecialty Hospital, strengthening Punjab cluster [6].
- Forecast EBITDA growth of **+10.5% / +9.8%** in 2025/26 [7].

---

## 4. Catalysts and Risks

### Catalysts [8]
- **Sustained EBITDA margin uplift** in key operations
- **Earnings-accretive expansion** (organic + M&A)
- **Resolution of legal issues in India** (Fortis-related historic litigation)

### Risks [9]
- Extended gestation period for greenfield/brownfield projects (Bulgaria, Rotterdam, Türkiye expansion, India bed adds)
- M&A integration / execution risk given the active deal pipeline
- **FX exposure** to lira, INR, SGD — currency strengthening in IHH's markets is an upside swing factor

---

## 5. Valuation Bridge — SOTP RM7.80

CLSA values the healthcare segment at the **mean EV/EBITDA for Singapore and Malaysia, and at –1SD for Türkiye, India and Greater China**; PLife REIT stake at Bloomberg consensus. The TP sits **>0.5SD below IHH's five-year EV/EBITDA mean** — explicitly conservative [12].

| Region | Stake | Enterprise Value (RMm) | Valuation Basis |
|---|---:|---:|---|
| Singapore | 100% | 26,882 | 15x 26CL EV/EBITDA |
| Malaysia | 100% | 14,677 | 13x 26CL EV/EBITDA |
| Türkiye (Acibadem) | 90% | 9,239 | 7x 26CL EV/EBITDA |
| India | 31% | 4,099 | 15x 26CL EV/EBITDA |
| Greater China | 70% | 550 | 6x 26CL EV/EBITDA |
| **Hospitals EV** | | **55,448** | |
| PLife REIT | 36% | 3,515 | Bloomberg consensus (SGD 4.56) |
| Net cash / (debt) | | 9,762 | Based on 26CL net debt |
| **Total Value** | | **68,724** | |
| **Target Price (RM)** | | **7.80** | **Implied 12.6x 26CL EV/EBITDA** |

[10]

---

## 6. Bottom Line — How to Position

The current-market thesis for IHH is **a "buy the dip" debate, not a directional growth call**:

- **Bull case (longer-duration investors)**: Acibadem becoming top contributor, Singapore renovation completion in 3Q25, India bed pipeline, and the lowest EV/EBITDA among regional hospital peers all support the 10–15% EBITDA CAGR path beyond 2025 [2][11].
- **Bear case / why CLSA stays HOLD**: 2025 is a trough year (EBITDA –3.2%); Malaysia pricing pressure is unresolved with PAC hearings looming in 2H25; sector regulatory overhang lingers; near-term EPS visibility weak [13].
- **Key shareholders / structural**: Mitsui & Co (32.8%), Khazanah (25.9%) — patient strategic capital provides downside cushion; 35% free float.

**For investors who can underwrite a 2026+ recovery, IHH offers the most attractive risk-adjusted entry among Asian listed hospitals; for catalyst-driven mandates, the resolution of Malaysian insurance/DRG news flow is the watch-item before a more constructive stance is warranted.**

---

**Sources**
- [1] IHH – HLD (Compelling longer term growth), CLSA, 12 Mar 2025 — Investment thesis (chunk 44, 607952899LinqAlpha.PDF)
- [2] IHH – HLD, CLSA, 12 Mar 2025 — Rating / TP / 10–15% EBITDA growth outlook (chunk 13)
- [3] IHH – HLD, CLSA, 12 Mar 2025 — Earnings & EBITDA growth forecasts 2025–27CL (chunk 9)
- [4] IHH – HLD, CLSA, 12 Mar 2025 — Malaysia operations and insurance/DRG pressure (chunk 31)
- [5] IHH – HLD, CLSA, 12 Mar 2025 — Singapore Mount Elizabeth Orchard renovation (chunk 32)
- [6] IHH – HLD, CLSA, 12 Mar 2025 — Acibadem expansion plans (chunk 33)
- [7] IHH – HLD, CLSA, 12 Mar 2025 — India operations growth (chunk 35)
- [8] IHH – HLD, CLSA, 12 Mar 2025 — Catalysts (chunk 45)
- [9] IHH – HLD, CLSA, 12 Mar 2025 — Investment risks (chunk 47)
- [10] IHH – HLD, CLSA, 12 Mar 2025 — SOTP valuation NEW table (chunk 40)
- [11] IHH – HLD, CLSA, 12 Mar 2025 — Peer comparison table (chunk 42)
- [12] IHH – HLD, CLSA, 12 Mar 2025 — Valuation methodology (chunk 46)
- [13] IHH – HLD, CLSA, 12 Mar 2025 — Cutting Malaysia earnings on insurance pressure (chunk 10)
- [14] IHH – HLD, CLSA, 12 Mar 2025 — IHH EBITDA breakdown by region 24A–27CL (chunk 36)
- *Additional CLSA notes consulted (not directly cited): Malaysia Healthcare "2025 set to be a tumultuous year" (14 Jan 2025), "Scrutiny on hospital pricing" (24 Feb 2025), "Malaysia Private hospitals – Symposium takeaways" (20 Jun 2025), "Malaysia strategy – Dissecting 2025 EPS growth" (20 Apr 2025).*

## 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] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [9] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [10] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [11] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [12] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [13] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>
- [14] **607952899LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607952899LinqAlpha.PDF>

