The positives outweigh the negatives for IHH, says Affin Hwang
KUALA LUMPUR: Affin Hwwang Capital research is keeping a positive outlook on IHH Healthcare Bhd 
with expectations of stronger earnings going forward.
"Despite the lingering concerns over an impairment risk on its 31% stake in Fortis and the weakening of the Turkish Lira, we think that overall positives still outweigh the negatives.
"We expect IHH to continue delivering stronger earnings moving forward on the back of
its strong execution and healthy prospects," it said in a note.
The research house maintained its buy rating in IHH with a higher target price of RM6.49 from RM6.36 previously.
It said the increase in target price was owing to the incorporations of Fortis' operation post-completion of the 31% stake acquisition.
Affin Hwang expects earnings growth to be backed by organic growth in its home markets, the ramping up of newer hospitals, shrinking start-up lossed from GHK and accretive earnings contributions from Fortis.
"While we do not rule out the possibility of any adjustment or impairment on Fortis given the ongoing investigation, we think that the chances of goodwill impairment stemming from Fortis’ profitability are diminishing as management has taken several measures to enhance profitability i.e. lower borrowings cost and clinical establishment cost savings," it said.
However, the research house lowered its 2019-21 EPS estimates by 18-24% as it postponed its EBITDA breakeven forecast for GHK by one year to 2020E adjusted its currency assumptions to account for the weakning Turkish Lira, imputed a higher interest rate from the sawp into local Turkish Lira-denominated loans.
with expectations of stronger earnings going forward."Despite the lingering concerns over an impairment risk on its 31% stake in Fortis and the weakening of the Turkish Lira, we think that overall positives still outweigh the negatives.
"We expect IHH to continue delivering stronger earnings moving forward on the back of
its strong execution and healthy prospects," it said in a note.
The research house maintained its buy rating in IHH with a higher target price of RM6.49 from RM6.36 previously.
It said the increase in target price was owing to the incorporations of Fortis' operation post-completion of the 31% stake acquisition.
Affin Hwang expects earnings growth to be backed by organic growth in its home markets, the ramping up of newer hospitals, shrinking start-up lossed from GHK and accretive earnings contributions from Fortis.
"While we do not rule out the possibility of any adjustment or impairment on Fortis given the ongoing investigation, we think that the chances of goodwill impairment stemming from Fortis’ profitability are diminishing as management has taken several measures to enhance profitability i.e. lower borrowings cost and clinical establishment cost savings," it said.
However, the research house lowered its 2019-21 EPS estimates by 18-24% as it postponed its EBITDA breakeven forecast for GHK by one year to 2020E adjusted its currency assumptions to account for the weakning Turkish Lira, imputed a higher interest rate from the sawp into local Turkish Lira-denominated loans.
\"We expect IHH to continue delivering stronger earnings moving forward on the back of
its strong execution and healthy prospects,\" it said in a note.
The research house maintained its buy rating in IHH with a higher target price of RM6.49 from RM6.36 previously.
It said the increase in target price was owing to the incorporations of Fortis' operation post-completion of the 31% stake acquisition.
Affin Hwang expects earnings growth to be backed by organic growth in its home markets, the ramping up of newer hospitals, shrinking start-up lossed from GHK and accretive earnings contributions from Fortis.
\"While we do not rule out the possibility of any adjustment or impairment on Fortis given the ongoing investigation, we think that the chances of goodwill impairment stemming from Fortis’ profitability are diminishing as management has taken several measures to enhance profitability i.e. lower borrowings cost and clinical establishment cost savings,\" it said.
However, the research house lowered its 2019-21 EPS estimates by 18-24% as it postponed its EBITDA breakeven forecast for GHK by one year to 2020E adjusted its currency assumptions to account for the weakning Turkish Lira, imputed a higher interest rate from the sawp into local Turkish Lira-denominated loans.
its strong execution and healthy prospects,\" it said in a note.
The research house maintained its buy rating in IHH with a higher target price of RM6.49 from RM6.36 previously.
It said the increase in target price was owing to the incorporations of Fortis' operation post-completion of the 31% stake acquisition.
Affin Hwang expects earnings growth to be backed by organic growth in its home markets, the ramping up of newer hospitals, shrinking start-up lossed from GHK and accretive earnings contributions from Fortis.
\"While we do not rule out the possibility of any adjustment or impairment on Fortis given the ongoing investigation, we think that the chances of goodwill impairment stemming from Fortis’ profitability are diminishing as management has taken several measures to enhance profitability i.e. lower borrowings cost and clinical establishment cost savings,\" it said.
However, the research house lowered its 2019-21 EPS estimates by 18-24% as it postponed its EBITDA breakeven forecast for GHK by one year to 2020E adjusted its currency assumptions to account for the weakning Turkish Lira, imputed a higher interest rate from the sawp into local Turkish Lira-denominated loans.
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