---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 362880
conversation_id: bbbf8ca5-41d1-4cf6-a4e3-57dd0b7333e1
citations: 0
created: 2026-05-31 20:26:43Z
---

# Provide a one‑year narrative of IHH, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# IHH Healthcare — One-Year Narrative (mid-2024 → mid-2025)

The IHH Healthcare story over the last twelve months of available CLSA coverage (latest note: 20-Jun-2025) is a transition from a "buy the regional growth proxy" thesis with strong tailwinds into a "regulatory-cap on the home market" stalemate that has compressed sentiment even as the long-term operational arc is intact. The narrative has four legs: (a) operationally strong quarters across all geographies through 2024, (b) a step-up in Malaysian footprint via the RM3.92bn Island Hospital acquisition, (c) a regulatory shock — DRG payment system + insurance premium scrutiny — that drove a rating downgrade and consensus EPS cuts in 1Q25, and (d) a partial sentiment rebound in 2Q25 as the Ministry of Health softened its tone, even as Turkish lira weakness opened a fresh overhang on Acibadem.

> **Note on corpus vintage**: CLSA's IHH coverage in our research archive runs through 20-Jun-2025. The narrative below is the one-year window most recently documented (mid-2024 → mid-2025); CLSA also transferred coverage of the name twice in this period, which created some discontinuity in the recommendation arc.

---

## 1. Mid-2024: BUY at RM7.60 — strong operational momentum across all four geographies

CLSA's starting position (30-May-2024 1Q24 review) was **BUY with TP RM7.60**. 1Q24 showed double-digit revenue and EBITDA growth in every geography YoY, with **Malaysia and Turkey adding operational beds, Singapore lifting revenue intensity from complex treatments, and India improving on cost management** [1]. Core net profit (ex-MFRS non-cash items) was RM586.4m, in line with 24CL [2]. The thesis was that bed-capacity expansion would compound: **+30 beds added in Malaysia in 1Q24 (heading to 160 by end-2024), +40 beds at Gleneagles Hong Kong, +270 in India**, with China revitalisation a slow burn at ~RM100m cash burn against group EBITDA of RM5bn [3].

By the **30-Aug-2024 2Q24 review**, the operating narrative remained intact — "yet another strong quarter" — but the rating was already shifted to **O-PF (TP unchanged at RM7.60)** [4]. 2Q24 saw double-digit revenue and EBITDA growth across geographies again, **Turkiye (incl. Europe) and India as the key drivers, with rising non-Lira contribution from European operations**; Singapore and Turkiye expanded EBITDA margins from higher complex-case mix [5]. The smaller units inflected positively: **Gleneagles Hong Kong occupancy reached 68% with mid-teens EBITDA margins, guided to be PATMI-positive by early 2025**, and the Shanghai hub-and-spoke model brought the China clinics to EBITDA breakeven [6].

## 2. September 2024 — Penang consolidation: RM3.92bn for Island Hospital

The pivotal corporate action of the year came on **04-Sep-2024**: IHH **outbid Affinity Equity Partners for Island Hospital in Penang at RM3.92bn cash** (including an adjacent land parcel). The hospital brings 600 built / ~500 operational beds, with **60% of revenue from medical tourists, particularly from Indonesia** [7]. Management guided **>RM200m of revenue + cost synergies over five years (RM25m in year one, 2025)**, with the deal funded mostly by external debt while preserving the minimum 30% dividend payout [8]. CLSA framed the multiple as **palatable at 19.2x 2024E EV/EBITDA after adjusting for synergies, vs prior Malaysian hospital M&A benchmarks** — EPS and ROE accretive from year two (2026) [9]. The Penang move was strategically important: it cemented IHH's dominant market share in Penang and put medical-tourism flow under one roof.

**Two weeks later at IHH's Investor Forum (IF24, 19-Sep-2024)**, the company hosted investors at Gleneagles Hong Kong and walked through Shanghai progress. Key messages: **GHK was EBIT-positive in 2023 and was guided to be profitable in 2025; Shanghai hospital EBITDA was negative but narrowing, with the clinic EBITDA-positive ex-HQ costs** [10]. Management committed to **lifting ROE into the teens over four-to-five years** (from 2Q24's 10.7% ex-one-offs) with disciplined, EPS- and ROE-accretive M&A [11]. CLSA also flagged that **the share-price run-up that week was partly tied to a possible privatisation rumour involving Mitsui** (which had previously attempted a take-private in 2021); CLSA reiterated O-PF and RM7.60 [12]. CLSA stayed at **O-PF with RM7.60 TP** post-IF24 [13].

## 3. November–December 2024 — Coverage rotation, ambiguous read on conviction

In a two-month window, **CLSA transferred IHH coverage twice**:

- **4-Nov-2024**: Sue Lin Lim → Zhen Ye Khoo, "no changes to recommendation or target price" [14].
- **2-Dec-2024**: Zhen Ye Khoo → Joe Liew, again "no changes to recommendation or target price" [15].

While neither note moved the thesis explicitly, the back-to-back rotation telegraphed an internal reshuffle. By the time the new analyst spoke substantively (Jan/Feb 2025 sector notes), the framing had clearly turned more cautious — even though the official rating had not yet visibly moved. (The March 2025 deep-dive subsequently revealed that the TP had been cut to RM6.90 at some point in this transition before being rolled forward to RM7.80 — see below.)

## 4. January–February 2025 — DRG and insurance shock: HOLD across Malaysian hospitals

The dominant story-line in 1Q25 was **regulatory and political pressure on Malaysian private-hospital profitability**, which decisively changed sentiment.

The trigger: **medical insurance premiums for 2025 were initially set to rise 40-70%** because medical cost inflation reached **15% in Malaysia in 2024 (vs ~10% global and APAC average)** [16]. Bank Negara intervened on 20-Dec-2024 to stagger the increases over three years (≤10% per year for ≥80% of policyholders), and the government, insurers, and private hospitals pledged RM60m to health reforms — including funding a **diagnosis-related group (DRG) payment model** [16].

In CLSA's **14-Jan-2025** sector note ("Malaysia Healthcare: 2025 set to be a tumultuous year"), the analyst laid out what DRG actually does: bundles patients into clinically similar groups paid at a fixed rate per group, replacing fee-for-service. Pilot-country evidence (US Medicare): **hospital stays compressed from 10 days to 8.5 days, inpatient cost inflation collapsed from 18% to ~3% within year one** [17]. The 2Q25 implementation timeline that Health Minister Datuk Seri Dzulkefly Ahmad floated was viewed as a stretch; World Bank case studies suggested **DRG transitions typically take ~5 years even after piloting** [18]. MOH had only just begun the 9-Jan townhall with private hospitals to collect feedback on staff and equipment-cost pressures, with no firm timeline; the same townhall acknowledged that **medical-tourism pricing is less politically sensitive and the government wants to promote it (Visit Malaysia Year 2026)** [19]. With **insurance payments accounting for 50-60% of revenue for Malaysian private hospitals**, the bargaining-power shift to insurers was the core concern [19].

In the **24-Feb-2025** follow-on ("Scrutiny on hospital pricing"), CLSA attended a PAC (Public Accounts Committee) public hearing — the first ever on health insurance premiums — and concluded that **scrutiny would persist all year and weigh on private-hospital pricing and margins** [20]. CLSA reiterated **HOLD on both IHH and Sunway** [20], with the explicit note that **IHH was already trading at 12.6x 2025 EV/EBITDA — viewed as fair, not cheap, against this backdrop** [21]; Sunway Healthcare's planned 2H25/2026 IPO valuation was at risk if the pricing question remained unresolved [21].

## 5. March 2025 — Deep-dive HOLD: RM7.80 TP (roll-forward), Malaysia cut, Singapore back-end-loaded

The **12-Mar-2025** "Compelling longer term growth" note was the decisive recalibration. Key calls:

- **Rating: HOLD reiterated. TP lifted from RM6.90 → RM7.80** (rolling SOTP forward to 2026CL earnings vs 25CL prior). The "+RM0.90" was a model-roll, not a thesis upgrade — short-term earnings headwinds prevented becoming "more constructive" [22].
- **Malaysia earnings cut**: 2025CL Malaysia EBITDA reduced to reflect insurance-company pricing pressure; CLSA expected uncertainty to persist through 2025 even after the government appeared to step back from imminent DRG implementation. PAC findings will only be tabled in Parliament in 2H25, prolonging the overhang [23].
- **Singapore: a 2026 story, not a 2025 one** — Mount Elizabeth Orchard renovations were guided to complete in 3Q25, with growth resuming strongly in 2026; Singapore would remain a key earnings contributor post-2026 [24].
- **Acibadem and India as the offsets** — Turkey & Europe and India both delivered **+19% and +20% EBITDA growth YoY in FY24**, driven by inpatient admissions and revenue intensity; Acibadem was now positioned to be **the top contributor to group EBITDA in 2026CL**. IHH India's Fortis added Shrimann Superspecialty Hospital (Punjab) to its cluster strategy [25].
- **4Q/FY24 results context**: FY24 revenue +14% to RM24.27bn, EBITDA +14% to RM5.47bn, core PATMI (ex EI) RM1.69bn (+32% YoY) [26].
- **Forecast cuts**: 25CL/26CL core earnings reduced by **-5% / -11%**. **EBITDA growth forecast: -3% / +12% / +11% for 2025-27CL** — i.e., 2025 was now a decline year before re-acceleration [22].

The full forecast snapshot:

| Year to 31 Dec | 2023A | 2024A | 2025CL | 2026CL | 2027CL |
| --- | --- | --- | --- | --- | --- |
| 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 growth (% YoY) | (7.5) | 31.6 | 17.9 | 11.6 | 21.7 |
| ROE (%) | 10.7 | 9.0 | 7.4 | 7.9 | 8.9 |
| Net debt/equity (%) | 18.6 | 33.9 | 31.9 | 26.5 | 19.5 |
| EV/EBITDA (x) | 12.9 | 13.7 | 14.0 | 12.2 | 10.8 |

Source: CLSA, 12-Mar-2025 [27]. Note the **leverage step-up from 18.6% to 33.9% net debt/equity between 2023 and 2024** — the Penang acquisition (paid mostly with debt) is the obvious driver.

At the time of publishing, the stock was trading near the **12M high of RM7.50 (low RM6.02)** and **+19% absolute / +21% relative over 12M** — i.e., the re-rating into the DRG noise had already partially happened before the bad-news framing crystallised.

## 6. April 2025 — Consensus catches up: Malaysia EPS growth cut, IHH a driver

CLSA's **20-Apr-2025** Malaysia Strategy note ("Dissecting 2025 EPS growth") made the macro-of-IHH point explicit: **Bloomberg consensus 2025 EPS growth for Malaysia fell from 9.0% at the start of the year to 7.0%, driven by forecast cuts for IHH, Hong Leong Bank, CelcomDigi, MISC and YTL Power** [28]. IHH was now a visible drag on the index narrative, not a contributor.

## 7. June 2025 — Sasana Symposium: tone softens, HOLD held, but lira opens a new hole

At the **20-Jun-2025** Sasana Symposium read-out, sentiment incrementally improved. CLSA's takeaway: **the Health Minister implied a "carrot rather than stick" approach to working with private hospitals on medical inflation, recognising the role of capital providers** [29]. **HOLD reiterated on both IHH and Sunway, with the stock at RM6.85 at close on 19 June 2025** [30].

However, the relief was partial — a new overhang emerged: **the Turkish lira had depreciated 15.2% against the ringgit YTD, putting Acibadem earnings under pressure when converted to ringgit. Acibadem accounted for 32% of group revenue and 27% of group EBITDA in 1QFY25** [31]. Importantly, the same note observed that **1QFY25 results from Malaysian operators (including IHH and Sunway) showed no downward pressure on margins yet from insurance-company pressure** [32] — i.e., the feared margin compression had not actually materialised in reported numbers as of 1Q25 reporting.

---

## Synthesis: What the 12-month arc says

| Period | Rating | TP (RM) | Dominant driver of sentiment |
| --- | --- | --- | --- |
| May 2024 | BUY | 7.60 | Strong 1Q24; bed-capacity expansion thesis [33] |
| Aug 2024 | O-PF | 7.60 | Strong 2Q24, smaller units inflecting [4][5] |
| Sep 2024 | O-PF | 7.60 | Island Hospital RM3.92bn acquisition; Penang dominance [7][9] |
| Sep 2024 (IF24) | O-PF | 7.60 | GHK / Shanghai progress; ROE-into-teens commitment [13][11] |
| Nov 2024 | (unchanged) | (unchanged) | Coverage transfer #1 (Lim → Khoo) [14] |
| Dec 2024 | (unchanged) | (unchanged) | Coverage transfer #2 (Khoo → Liew) [15] |
| Jan 2025 | HOLD | (implied) | DRG threat; insurance scrutiny; 40-70% premium hikes [17][19] |
| Feb 2025 | HOLD | (implied 6.90) | PAC public hearing; IHH at 12.6x 25E EV/EBITDA [20][21] |
| Mar 2025 | HOLD | 7.80 | Forecast cuts (-5%/-11% 25/26CL); Singapore renovations to 3Q25; SOTP roll-forward [22][24] |
| Apr 2025 | HOLD | 7.80 | Index-level EPS cut from 9% → 7%, IHH a driver [28] |
| Jun 2025 | HOLD | 7.80 | MOH softens tone; lira -15.2% YTD now new overhang [29][31] |

**The valuation arc**: Despite a -16% earnings forecast cut and a downgrade chain (BUY → O-PF → HOLD), the SOTP-based TP only narrowed marginally (RM7.60 → RM7.80 via roll-forward, having dipped to RM6.90 in between). This is the analyst telling investors: the structural Asia hospital proxy thesis is intact (Acibadem top EBITDA contributor by 2026, Singapore reopening in 2026, India 20%+ growth), but the political/regulatory drag on Malaysia plus FX translation on Turkey is enough to keep the stock range-bound and the analyst on the sidelines until either the DRG outcome clarifies or the lira stabilises.

**Investor takeaways from this 12-month arc**:
1. **The structural Asian hospital proxy thesis (Malaysia + Singapore + India + Turkey) remains intact** — Acibadem and India both grew EBITDA ~20% in FY24; Singapore comes back in 2026 [25].
2. **The bear case is regulatory and FX, not operational** — 1Q25 margins held up; the worry is forward, not realised [32].
3. **Island Hospital reset the leverage profile** — net debt/equity went from 18.6% (2023) to 33.9% (2024), funded mostly by debt; year-two EPS accretion (2026) is the test [8][9][27].
4. **Multiple is fair, not cheap** — 12.6-14x 2025 EV/EBITDA against an EBITDA-decline year keeps the stock from re-rating until either consensus stops cutting or the regulatory cloud lifts [21][27].
5. **CLSA's stance is now patient HOLD** — long-term 10-15% EBITDA growth p.a. is "attainable" per CLSA but they "cannot become more constructive at this juncture" given the 2025 headwinds [22].

---

**Sources**
[1] IHH - BUY (A strong quarter despite seasonality) — CLSA (30 May 2024) — 607930972LinqAlpha.PDF
[2] IHH - BUY (A strong quarter despite seasonality) — CLSA (30 May 2024) — 607930972LinqAlpha.PDF
[3] IHH - BUY (A strong quarter despite seasonality) — CLSA (30 May 2024) — 607930972LinqAlpha.PDF
[4] IHH - O-PF (Progressing well) — CLSA (30 Aug 2024) — 607938072LinqAlpha.PDF
[5] IHH - O-PF (Progressing well) — CLSA (30 Aug 2024) — 607938072LinqAlpha.PDF
[6] IHH - O-PF (Progressing well) — CLSA (30 Aug 2024) — 607938072LinqAlpha.PDF
[7] IHH - O-PF (Conquering Penang) — CLSA (04 Sep 2024) — 607938743LinqAlpha.PDF
[8] IHH - O-PF (Conquering Penang) — CLSA (04 Sep 2024) — 607938743LinqAlpha.PDF
[9] IHH - O-PF (Conquering Penang) — CLSA (04 Sep 2024) — 607938743LinqAlpha.PDF
[10] IHH - O-PF (Reality check at IF24) — CLSA (19 Sep 2024) — 607939888LinqAlpha.PDF
[11] IHH - O-PF (Reality check at IF24) — CLSA (19 Sep 2024) — 607939888LinqAlpha.PDF
[12] IHH - O-PF (Reality check at IF24) — CLSA (19 Sep 2024) — 607939888LinqAlpha.PDF
[13] IHH - O-PF (Reality check at IF24) — CLSA (19 Sep 2024) — 607939888LinqAlpha.PDF
[14] Malaysia stock coverage (Transfer of coverage) — CLSA (04 Nov 2024) — 607943139LinqAlpha.PDF
[15] Malaysia stock coverage (Transfer of coverage) — CLSA (02 Dec 2024) — 607945908LinqAlpha.PDF
[16] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[17] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[18] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[19] Malaysia Healthcare (2025 set to be a tumultuous year) — CLSA (14 Jan 2025) — 607948170LinqAlpha.PDF
[20] Malaysia Healthcare (Scrutiny on hospital pricing) — CLSA (24 Feb 2025) — 607951450LinqAlpha.PDF
[21] Malaysia Healthcare (Scrutiny on hospital pricing) — CLSA (24 Feb 2025) — 607951450LinqAlpha.PDF
[22] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[23] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[24] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[25] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[26] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[27] IHH - HLD (Compelling longer term growth) — CLSA (12 Mar 2025) — 607952899LinqAlpha.PDF
[28] Malaysia strategy (Dissecting 2025 EPS growth) — CLSA (20 Apr 2025) — 607956315LinqAlpha.PDF
[29] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[30] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[31] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[32] Malaysia Private hospitals (Symposium takeaways) — CLSA (20 Jun 2025) — 607962474LinqAlpha.PDF
[33] IHH - BUY (A strong quarter despite seasonality) — CLSA (30 May 2024) — 607930972LinqAlpha.PDF

*Note on scope: This narrative is built from CLSA's internal research archive (RMS), which provides the analytical arc — ratings, target prices, forecast revisions, and on-the-ground stakeholder colour (IF24, Sasana Symposium, PAC hearings). The CLSA corpus's most recent IHH-coverage note is dated 20-Jun-2025; public-data sources (transcripts/filings/news) post-June 2025 were not surveyed in this turn and could refine the post-1H25 picture.*

