SINGAPORE (Mar 4): IHH Healthcare’s net profit for 4QFY2018 ended Dec 31 jumped 403% to RM509.42 million ($169 million), from the RM101.26 million it posted a year ago, as the group recorded stronger operational performance, boosted by foreign exchange (forex) gains from Acibadem Holdings’ non-Turkish lira loans.

Revenue for the quarter ended Dec 31, 2018 rose 10% to RM3.17 billion, from RM2.89 billion a year ago, on sustained organic growth from its existing operations and the continuous ramp-up of the Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital.

“The acquisition of Amanjaya (acquired in October 2018) and Fortis (acquired in November 2018) also contributed to the increase in both the group’s 4QFY2018 revenue and Ebitda (earnings before interest, taxes, depreciation and amortisation).

“Excluding the effects of the strengthening ringgit, the group’s revenue and Ebitda increased 28% and 33% respectively in 4QFY2018 over the same period last year,” IHH said in a bourse filing on Feb 27.

Its 4QFY2018 Ebitda was also boosted by a RM50.4 million revaluation gain on PLife REIT’s investment properties, compared with a RM6.4 million revaluation gain in 4QFY2017.

For FY2018, however, the group’s net profit fell 35% to RM627.69 million, from RM969.95 million a year ago, though revenue rose 3% to RM11.52 billion from RM11.14 billion.

The group said in a separate statement that the lower net profit was mainly because of higher net forex losses for Acibadem’s non-Turkish lira loans, and because FY2017 benefited from a one-off gain on the disposal of its stake in Apollo Hospitals.

Excluding the impact of exceptional items, it said net profit would have come in at “a record high of RM1,027.6 million for the full year 2018, up 73% year-on-year, boosted by foreign exchange gains arising from the stronger US dollar on the group’s USD-denominated cash balances”.

The group recommended a final dividend of three sen a share in respect of FY2018, subject to shareholders’ approval.

At a media briefing on Feb 27, IHH managing director and CEO Dr Tan See Leng said the group plans to shift its focus to asset integration, having embarked on aggressive expansion in the past five to six years.

The group still has an unincurred capital expenditure (capex) of RM1.96 billion to spend for its hospital projects over the next four years, which will add 1,200 beds to its existing portfolio of 15,000 licensed beds.

Of the RM1.96 billion, RM458.6 million will be for its projects in Malaysia: Pantai Hospitals in Kuala Lumpur, Ayer Keroh, and Klang, as well as a greenfield project — Gleneagles Medini — to be funded using its Malaysia operating cash flow and, if needed, new bank facilities.

Meanwhile, RM933.8 million has been earmarked for the group’s Gleneagles Hospitals in Shanghai and Chengdu, China; RM145.4 million for Gleneagles Hong Kong; and RM354.1 million for its first hospital in Yangon, Myanmar.

The balance RM65.4 million will be used for the expansion of its private medical education arm, International Medical University.

The capex excludes any hospital expansion in the pipeline for hospitals under Fortis Healthcare. Tan also said Fortis was not involved in the ongoing dispute between Daiichi Sankyo and the Singh brothers.

“The suit is between the [Singh] brothers and Daiichi [Sankyo], and the brothers are no longer promoters of Fortis.

“As far as the hearing itself is concerned, they have asked the [Singh] brothers to appear and submit their affidavits. We wouldn’t know what the affidavits would be, or how it would impact us. I think it’s a little premature [to speculate]. But suffice it to say that, at this particular point in time, we already have control of the board. The majority (five out of eight) of its directors are our nominees.”

Tan acknowledged, however, that the dispute would not be a “non-event” to IHH, but that the group continues to make progress and inroads with Fortis, with most initiatives set out in its 100-day turnaround plan on track.— The Edge Financial Daily

Arjuna Chandran Shankar and Tan Xue Ying are writers at The Edge Financial Daily

This story appears in The Edge Singapore (Issue 871, week of Mar 4) which is on sale now. Subscribe here