Asia's biggest hospital operator IHH Healthcare faces currency losses on lira

[KUALUA LUMPUR] IHH Healthcare Bhd, Asia's biggest hospital operator, expects its Turkish unit to post currency losses following a slump in the lira.

The company's Acibadem Saglik Yatirimlari Holding AS unit will recognise exchange losses in its profit and loss account when it converts dollar and euro loans into lira, Tan See Haw, IHH chief financial officer, said in an interview Thursday.

Acibadem, with a network of 17 hospitals, accounts for about a third of IHH's earnings. The lira has tumbled 14 per cent against the dollar this year, making it the second-worst performer among emerging-market currencies.

"Foreign currency gains and losses are accounting in nature and are unrealized," Mr Tan said in e-mailed comments, without giving details. A spokesman declined to comment on the possible impact on IHH's earnings.

The lira slumped to a record low Monday as Turkey's ruling party lost its parliamentary majority for the first time since 2002, raising concern about the trajectory of policy making for the US$800 billion economy.

IHH, with a market value of US$13 billion and controlled by Malaysia's state-investment company Khazanah Nasional Bhd, said it doesn't see any cash-flow implications from the losses and does not hedge against such accounting translations. Turkey and Singapore are IHH's main overseas markets.

Acibadem plans to conserve hard currency received as payments from medical tourism customers to meet its dollar and euro interest and principal payments, Mr Tan said.

IHH expects the strengthening of the Singapore dollar against the ringgit to boost the group's net assets and results upon consolidation of its Singapore operations, while the weaker lira will have an opposite effect, he said.

The Singapore dollar has risen about 5 per cent versus the ringgit this year. IHH has gained 22 per cent this year, the best performer on the FTSE Bursa Malaysia KLCI Index. The stock trades at 46 times 12-month projected earnings, compared with 15.5 times for the benchmark gauge.

BLOOMBERG