According to Tan, private hospitals showed moderating revenue in 2HFY2023 as public hospitals’ occupancy also eased, and ebitda margin was pressured due to higher costs.
"While it could be a little early to conclude that the easing is permanent, we believe that private hospitals will likely see a slower start to FY2024, especially in 1QFY2024, both due to moderation in public hospitals as well as the festive season," says Tan.
As such, she believes IHH is seeing a normalisation of its earnings post-pandemic.
Earnings for the healthcare giant, with operations across Singapore, Malaysia and many more markets, will see growth resuming at "normal" rates locally this current FY2024.
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In addition, IHH can expect a lift from the likes of Gleneagles in Hong Kong, which is seen to achieve a positive contribution to the bottom line.
"With new management in place and IHH embarking on a new growth plan, we are optimistic that it will be able to drive a growth trajectory moving forward," says Tan.
Her target price for IHH is $2.18 and RM7.60 respectively for the counter quoted on both the Singapore and Kuala Lumpur exchanges.
She notes that IHH is now trading at below 13x FY24F EV/EBITDA, which is below -0.5SD of its historical mean and close to troughs seen during the pandemic months.
"This is an attractive level to ride on its medium-term growth trajectory," says Tan.
IHH Healthcare shares last changed hands at $1.72.
