Strong underlying operations ex-currency
4Q14 revenue was up 9% yoy and earnings rose 42% yoy. This was driven by 1) higher inpatient admissions and revenue intensity, and 2) a revaluation gain of RM52.7m for PLife REIT’s investment properties and a divestment gain of RM36.4m. Stripping out the effects of PLife REIT, 4Q14 underlying core earnings rose 26% yoy. Overall, FY14 core earnings on a constant currency basis increased by 25% yoy.
Both Singapore and Malaysia remain strong
Parkway Pantai’s FY14 EBITDA grew 16% yoy, and continues to benefit from operating leverage at its new hospitals (FY14 EBITDA margins of 25.5% vs. FY13’s 24.9%). Mount Elizabeth Novena’s FY14 EBITDA increased to RM87.1m (FY13: RM21.6m), which translates to margins comparable to its existing Singapore hospitals. Management highlighted stable medical tourism, with an increase in foreign patients from non-traditional markets such as the Middle East and Myanmar. Revenue per inpatient in Malaysia increased by a healthy 9.2% yoy, driven by higher revenue intensity and price increases to compensate for cost inflation.
Acibadem impacted by weak currency
FY14 EBITDA rose 3% yoy on a depreciating Lira, which fell 9%. Ex-currency, FY14 EBITDA increased by 14% yoy. We can expect further margin expansion in Acibadem as Atakent builds up operating leverage (opened Jan 14).
Strong expansion pipeline
IHH plans to deliver more than 9,000 (currently ~7,000) new beds by 2017. There is also upside potential from Gleneagles Hong Kong (target commissioning early 2017; 500 bed capacity) which we have yet to include in our numbers.