KUALA LUMPUR: IHH Healthcare Bhd is expected to face significant adjustments under the Malaysian Financial Reporting Standards (MFRS) 129, although the impacts are largely non-cash in nature, said Maybank Investment Bank Bhd (MaybankIB).
IHH Healthcare has historically been affected by hyperinflation, notably due to the falling Turkish lira, which has negatively impacted group earnings before interest, tax, depreciation, and amortisation (Ebitda) as well as core net profit.
Given the falling lira, Maybank IB expects IHH Healthcare reported net profit to be negatively impacted again due to higher depreciation and amortisation from asset revaluation and lower earnings translation from a weaker lira.
“Moderating the impact, however, is a net monetary gain resulting from the decrease in real terms of IHH’s borrowings.
“We cannot quantify the impact of MFRS 129 without access to its hospital subsidiary Acibadem’s detailed financial statements but emphasise that the aforementioned are largely non-cash in nature,” it said in a note.
Notwithstanding the above, Maybank IB said Acibadem carries out bi-annual price adjustments to cope with the depreciating lira.
The firm also understands that most of its patients are wealthy and hold US dollar/euro assets as hyperinflation hedges.
“We expect MFRS 129 adjustments to compress reported earnings but not core earnings.
“We remain largely positive on Acibadem’s non-lira income stream and growth in IHH’s other key segments such as India and Malaysia.
“Unrelated to this event, we trimmed its financial year 2025 (FY25) to FY27 earnings by 3.0 per cent, 2.0 per cent and 2.0 per cent post-housekeeping. We maintain ‘Buy’ with an unchanged target price of RM7.97,” it added.
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