KUALA LUMPUR (April 9): Analysts have maintained their "hold" calls on IHH Healthcare Bhd as they remain cautious after the healthcare group's auditors issued a qualified opinion last week on its FY18 financial statements in relation to Fortis Healthcare Ltd.

IHH acquired a 31.1% stake in Fortis in November 2018, and the group will be making an open offer to buy an additional 26% stake in Fortis upon the lifting of status quo order by India's Supreme Court.

According to the auditors, the rationale of the opinion is that there are ongoing investigations by various parties on Fortis, which means they are unable to ascertain the extent of funds' diversions, if any, in excess of the amount that had been provisioned for prior to the acquisition (circa RM261.2 million).

Hong Leong Investment Bank (HLIB) Research, in a note today after a conference call with IHH, said the group's management had reiterated that concerns raised in the qualified opinion were known prior to the acquisition.

"Fortis will undergo the procedural impairment test annually as per the group's other assets. Given the many external variables affecting Fortis, we are of the opinion that out of all of IHH's core assets, Fortis has the highest risk of impairment moving forward. Post clarification from management we are uplifting our under review call," HLIB Research said.

HLIB Research maintains "hold" on the stock with a slightly lower target price of RM6.02 from RM6.03 previously.

Meanwhile, AmInvestment Bank is also "holding" the stock with an unchanged fair value of RM5.30.

"We are negative on this as there is a risk of impairments which would impact the groups' financial statements. The provisional goodwill accounted for Fortis in FY18 is RM1.5 billion," AmInvestment Bank said in a note today.