IHH Healthcare's Acibadem unfazed by Turkish protests

"No immediate cause for concern yet," says bosses.

According to CIMB, its conversation with IHH’s management and channel checks revealed no immediate cause for concern yet. Its share price pullback since late-May was driven by market fears, rather than a reaction to the Istanbul civil unrest.

Here's more:

What Happened. While we have received sporadic reports on protestors being dispersed in Istanbul’s central Taksim Square on Sunday, our focus is essentially on IHH’s 65%-owned Acibadem (40% of revenue and 17% of PATMI, as atend-1Q13), which operates 15 hospitals in Turkey.

What We Think. Though the tensions have raised the risk of an extended period of civil unrest that could undermine Turkey’s image as a rising global economic power and a model of modern Islamic democracy, there is no real damage done to the actual economy yet, according to our sources.

Our checks with IHH’s management also revealed that all its Acibadem hospitals in Istanbul (five) and Ankara (one) are seeing business as usual. Injured protestors were sent to public hospitals instead of Acibadem hospitals.

What You Should Do. In our opinion, IHH’s share price pullback of late has more to do with global market developments and not the Turkish political situation. We still hold onto our belief that IHH is in a sweet spot to benefit from the growing private healthcare consumption theme and revenue intensity in all its three markets.

Longer term, we are upbeat about the group’s recently awardedconcession for its 60%-owned Gleneagles HK Hospital, which on commencement, can achieve charges that are 20-25% higher than PPL Singapore’s.

The greater scaling-up of contributions from Novena and the two new Turkish hospitals in the next nine months will be key to enhance IHH's FY13 earnings.