U8HX:IHH post 2Q net profit of RM612.1mil on exceptional gain, eyes strategic assets
KUALA LUMPUR: IHH Healthcare Bhd’s net profit rose 26.6 per cent to RM612.10 million in the second quarter ended June 30, 2022 (Q2 2022) from RM483.31 million a year ago, mainly due to an exceptional gain of RM295.5 million upon application of the Malaysian Financial Reporting Standards (MFRS) 129 on its Turkey operations.
Revenue in Q2 2022 improved to RM4.37 billion versus RM4.27 billion before.
In a statement, IHH said Malaysia saw a strong recovery as patients return, Singapore had steady performance with higher revenue intensity, while Turkey and Europe displayed strong underlying operational performance.
"For India, revenue decreased two per cent to RM953.7 million from a high base in Q2 2021 that saw a high number of COVID-19 patients and COVID-19 tests, as well as from the disposal of Continental Hospitals.”
"Inpatient admissions increased 22 per cent despite the loss of patients from the disposal of Continental Hospitals in December 2021, and revenue intensity decreased 15 per cent.”
For the cumulative six months, net profit was RM1.10 billion as compared with RM858.93 million in the corresponding period last year, whle revenue rose to RM8.54 billion versus RM8.22 billion previously.,
"(Overall) the second quarter of 2022 is an inflexion quarter for IHH as its core business of hospital and healthcare services resumes growth. Even with short-term headwinds such as global inflationary trends and rising interest rates, the group’s long-term growth trajectory remains intact.”
On prospects, it said as borders reopen and with the relaxation of COVID-19 restrictions, the group has seen growing demand for elective procedures as well as an increase in local and foreign patient volumes to its hospitals, thus mitigating the effects of lower revenues from COVID-19-related services, which has largely dissipated.
Higher energy prices have also added to the group’s cost of operations, it said.
"The group will maintain a tight rein on costs and leverage synergies from its international network to achieve cost savings. It expects net finance cost to increase with the repayment of its perpetual securities (an equity instrument) from existing cash balances and loans drawdown, and a rising interest rate environment.”
Notwithstanding that the group is managing the effects of rising inflation on its operations, Turkey is classified as a hyperinflationary economy under MFRS 129. The group has applied MFRS 129 to its Turkish operations when reporting its financial performance from this quarter onwards.
As the group pivots its strategy towards growth, it continues to seek opportunities to acquire strategic assets. It will also focus on improving its returns on equity by constantly reviewing its asset portfolio.
In addition, the group is building distinct platforms where it sees strong growth potential, such as its laboratory businesses.