KUALA LUMPUR (Aug 6): RHB Research Institute Sdn Bhd has maintained its “Buy” rating on IHH Healthcare Bdh at RM5.90 with an unchanged target price of RM7 and said IHH remains its Top Pick in the healthcare space, as the researhc house continues to like its regional footprint and longer term earnings growth trajectory.
In a note today, the research house said IHH is releasing its 2Q18 results on Aug 28 and reported numbers are expected to be in line.
“We expect translated earnings gains from a weaker ringgit to be offset by unrealised forex losses from its Turkish operations.
“Our sensitivity analysis suggests that every 1% change in IHH’s operating currencies against its respective entities would impact its FY18F shareholder’s equity by 0.02% and net profit by 0.7%,” it said.
RHB Research said seasonally, 2Q18 is a weaker quarter due to Ramadan and Aidil Fitri, which were celebrated during the quarter.
“Meanwhile, we expect the tax holiday from June-September in Malaysia to boost demand for private healthcare, and provide a short-term lift to EBITDA margin at its Malaysian operations due to lower cost for drugs and medicine.
“In the results call, we would watch out for updates on progress with regards to the Fortis acquisition and debt restructuring exercise at its Turkish operations,” it said.