IHH Healthcare expected to quell pain from cost pressures

SINGAPORE (Aug 26): UOB Kay Hian is maintaining its “hold” call recommendation on IHH Healthcare, lowering its target price from $2.31 previously to $2.14 as 2Q earnings were dragged down by startup costs of new hospitals as well as higher staff costs.

In a Friday report, analysts Thai Wei Ying and Andrew Chow say they have lowered their net profit forecasts for IHH by 6%-12% for 2016-17 respectively after factoring in higher wage costs to meet higher staffing requirement, higher pre-operating expenses for Gleneagles Hong Kong, and higher start-up costs from new hospitals.

The analysts estimate pre-operating expenses for Gleneagles Hong Kong to be at RM5.1 million for 2H16 leading to early 2017.

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