Kenanga Investment Bank has upgraded IHH Healthcare Bhd to OUTPERFORM from MARKET PERFORM and raised its target price to RM9.10 from RM8.50, citing improving hospital operations in Singapore and Greater China, alongside stronger earnings prospects across the group’s key markets.
Following a meeting with IHH’s investor relations team, the research house raised its FY2026 and FY2027 net profit forecasts by 6% each, primarily to reflect a faster-than-expected reduction in losses from Greater China.
Kenanga said IHH’s share price had retreated 10% year-to-date, while its outlook for the second half of FY2026 was supported by recovering patient volumes, higher-value medical procedures and improving hospital utilisation.
IHH’s Malaysian operations recorded improved profitability in the second quarter of FY2026, with earnings before interest, taxes, depreciation and amortisation (EBITDA) margin increasing to 28% from 26% in the preceding quarter.
Bed occupancy rose to 64% from 59%, while daycare revenue increased 13% year-on-year to RM286 million in the first half, accounting for 11% of total Malaysian revenue.
Kenanga expects the group’s Malaysian operations to perform better in the second half, supported by seasonal demand and a greater focus on higher-value surgical procedures.
IHH is also relocating selected outpatient and daycare services to dedicated ambulatory care centres, allowing its hospitals to reserve inpatient capacity for more complex treatments.
In Singapore, Kenanga said hospital bed occupancy had recovered to above 52% in August and September, compared with 51% in the second quarter and 49% in the first quarter.
Despite lower capacity utilisation earlier in the year, Singapore’s EBITDA margin improved to 29% in the second quarter from 26% in the first.
The group is strengthening partnerships with insurers and expanding outpatient services to support patient volumes and improve hospital efficiency.
Meanwhile, Greater China’s net losses narrowed to RM56 million in the first half of FY2026 from RM90 million a year earlier.
The 500-bed Gleneagles Hong Kong Hospital recorded its sixth consecutive month of net profitability, while its EBITDA margin improved to 19% in the first half.
Kenanga consequently reduced its projected FY2027 losses for Greater China to RM129 million from RM250 million previously.
In India, IHH aims to improve Gleneagles Healthcare’s EBITDA margins from approximately 10% to between 18% and 19% through closer operational integration with Fortis Healthcare.
Fortis currently manages five of the six hospitals in the Gleneagles India network.
Kenanga noted that a Delhi High Court-ordered forensic audit involving Fortis’ historical shareholding and change of control remains an issue to monitor. The order, however, does not impose any liability, penalty or financial fine on IHH or Fortis.
In Türkiye and Europe, the research house expects stronger second-half performance from pricing adjustments, medical tourism and contributions from newly acquired hospitals.
Regional EBITDA increased 35% year-on-year in the second quarter, while revenue per inpatient admission rose 22%.
Kenanga said risks to its outlook include regulatory changes, overseas operational challenges and the potential introduction of a diagnosis-related group payment system to regulate private healthcare costs in Malaysia.
