IHH Healthcare may be threatened by a decline in Indonesian patients

But analyst predicts only a slight impact.

According to CIMB, it thinks that since only 18% of total patients admitted to PPL Singapore come from Indonesia, the net contribution from this group is only about 3% of the group’s PATMI, considering (i) domestic patients’revenue intensity has increase sharply, (ii) more than half of the cases from Indonesian patients are non-elective treatments and (iii) larger contributions from other markets dilute its sensitivity to this risk.

Here's more from CIMB:

2Q13 and 1H13 core earnings were in line, accounting for 22% and 37% of our FY13 numbers. However, we cut FY13-15 estimates by 7-9% as we see more start-up and other opex costsgoing forward.

Our SOP-based target price is reduced as a result. We keep our Outperform rating as we expect a more robust ramp-up of the group’s global operations.

Marked improvement
2Q13 core net profit was driven by growth at its new hospitals, savings in finance costs and the recapitalisation of Acibadem. This offset the depreciation and finance costsrelating to new hospitals that had to be recognised in the P&L after completion.

There was a one-off RM22m tax credit in 2Q13 relating to the tax reversal in Singapore.

There was a marked improvement in the average revenue per inpatient at all of its hospitals in Singapore, Malaysia and Turkey. Excluding the accounting treatment for REIT, all of its business segments recorded revenue growth both yoy and sequentially.

Novena, as predicted, broke even on an EBITDA level in 2Q13. We expect an EBITDA breakeven point for Acibadem Bodrum sometime in 4Q13.