IHH Healthcare feverish with 19% profit crash

Blame it on start up losses.

According to DBS, 3Q within expectations. 3Q core net profit slipped 19% y-o-y to RM96.1m, largely due to start up losses from Novena Hospital (Novena).

Here's more from DBS:

Excluding losses from Novena and exceptional items, net profit would have been up by 22% to RM141.6m in 3Q12, from RM116.4m in 3Q11.

9M core profits (including Novena medical suites) forms 76% of our forecasts.

Novena losses narrowing. In 3Q12, Novena saw more than 500 inpatient admissions, contributing RM19.1m in revenues registering an EBITDA loss of RM23.9m.

This was an improvement from 2Q12’s EBITDA loss of RM28.3m. Management is optimistic that Novena’s performance will continue to improve with increasing admissions on the back of rising number of specialists operating there. We understand that management still expects Novena to turn EBITDA positive by 2H13.

Recapitalising Acibadem for interest savings. The group intends to recapitalise Acibadem in order to repay a portion of the US$ debt, and indicated this should result in interest savings of US$11m p.a..

This is also expected to reduce its exposure to currency fluctuations and result in a stronger balance sheet for Acibadem.