Hong Leong, RHB and UOB Kay Hian upgrade IHH to ‘buy’ after earnings beat estimates

[SINGAPORE] Analysts at the research houses of Hong Leong Bank, RHB and UOB Kay Hian have upgraded previous neutral ratings on integrated healthcare group IHH Healthcare to “buy”, following stronger-than-expected second-quarter results.

The healthcare group posted on Thursday (Aug 27) a 29.3 per cent rise in net profit to RM573 million (S$181 million) for the second quarter ended Jun 30, 2026, from RM443 million in the same period the previous year.

This beat Bloomberg consensus estimates of RM487.4 million in net profits, while earnings per share of RM0.0648 surpassed the consensus RM0.05875 estimate.

Net profit for the first half of 2026 rose 15 per cent to reach RM1.1 billion, up from RM957 million in the previous corresponding half.

Meanwhile, revenue for the second quarter rose 11.9 per cent to RM7.05 billion from the year-ago period.

Hong Leong Investment Bank analyst Chee Kok Siang noted in a research report on Friday that first half-year core earnings had come in ahead of estimates for the full year.

The bank cited stronger profit margins in IHH’s Malaysia operations following cost optimisation measures, and higher revenues in its operations in Turkey as key positives.

This stronger performance, along with a recent correction in the group’s share price, “could help rekindle market interest in the stock”, said Chee.

IHH, which is dual-listed in both Singapore and Malaysia, has recently seen its share price on Bursa Malaysia fall by 9.2 per cent over a three-month period, though it remained 20 per cent higher compared with a year ago, indicated a Nomura report on Thursday.

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Chee raised the bank’s target price for the healthcare group to RM9.10, from RM9 previously.

Meanwhile, RHB upgraded the stock to “buy” from “neutral” at a target price of RM9.54. Likewise, UOB Kay Hian’s Philip Ching also raised his recommendation on the stock to “buy”, with a target price of RM9.25.

Among analysts tracked by Bloomberg, 24 have a “buy” rating on IHH, while three rate it “hold”, with no “sell” calls. The 12-month consensus target price stands at RM10.23.

RHB raised its FY2026 to FY2028 earnings forecasts for the company by 7 to 8 per cent, adding that these were based entirely on higher earnings assumptions for IHH’s Turkish operations.

Q2 revenues for Acibadem Healthcare Group, IHH’s Turkish hospital business in which it owns a 90 per cent stake, rose 20 per cent.

This was driven by a rise in admissions of about 15 per cent and a 22 per cent surge in case intensity, said RHB.

Hong Leong’s Chee said that revenues in Malaysia are likely to strengthen seasonally with a stronger mix of elective surgeries – particularly in the fourth quarter. Meanwhile, the group’s expansion in India through Fortis is expected to boost its performance in the second half.

Q2 revenues in IHH’s Singapore portfolio declined 9.7 per cent from the year-ago period, but analysts remained optimistic on the segment’s outlook.

Chee noted that bed occupancy rates in Singapore had risen to 55 per cent in July, up from 51 per cent in Q2, and 49 per cent in Q1. Meanwhile, the ramp-up of Mount Elizabeth Hospital in Orchard is expected to support revenue and earnings, he added.

RHB added that concerns over the group’s Singapore portfolio have been “largely priced in” as bed occupancy rates recover.

Kenanga Investment Bank, however, remained more cautious on the company’s valuation.

Analyst Raymond Choo said in a Friday report that the company’s fundamentals are “already reflected in its share price”, while its H1 results had met the broker’s expectations.

He maintained the bank’s target price for the group at RM8.50, holding his recommendation for the stock at “market perform”.

Shares of IHH Healthcare on the Singapore Exchange were trading 0.4 per cent higher at S$2.66 on Friday at about 3.30 pm.