Even as healthcare frontliners battled to save lives amid the Covid-19 pandemic, professionals in the healthcare industry looking at different sets of figures had to deal with reduced patient visits to hospitals and postpone elective surgeries to minimise infection spread during the pandemic.

Healthcare providers had to think quickly on their feet and pivot to providing services related to Covid-19 treatments even as patients in other segments of the hospitals dwindled.

While it was rubber glove makers that led earnings growth in the healthcare sector, to its credit, IHH Healthcare Bhd’s profits still grew enough to take home the title of highest growth in profit after tax over three years in the Super Big Cap category that ranks companies with a market capitalisation of at least RM40 billion.

Notably, the healthcare provider has a large network of hospitals across Malaysia, Singapore, India, China and Turkey.

Looking at healthcare providers’ net profit in the period under review, there is no denying that 2020 was a bumpy year for the group as its operations were affected by the pandemic. For the financial year ended Dec 31, 2020 (FY2020), net profit slipped to RM288.9 million from RM551.5 million in FY2019.

It did not take the healthcare group long to rebound, though. By FY2021, IHH had managed to regain its footing, as economies opened up and patients started to trickle back into hospitals after a year’s hiatus.

In FY2021, net profit bounced back to RM1.86 billion, far surpassing the amount registered prior to the pandemic. IHH attributed the improved earnings to stronger revenue, which came in at RM17.1 billion (up 28% from the previous year) as a result of returning local patients, contributions from Covid-19 services rendered and maintaining cost discipline.

Based on The Edge BRC awards methodology, IHH’s risk-weighted three-year net profit compound annual growth rate (CAGR) for the period under review from FY2018 to FY2021 was 43.7% — an impressive feat for a group directly affected by the pandemic.

For the first six months of FY2022, net profit grew to RM1.11 billion, from RM858.923 million in the previous year. This comes on the back of total revenue of RM8.54 billion in 1HFY2022, a 4% y-o-y increase from RM8.22 billion.

In an August 2022 report, RHB Research said IHH should benefit from the gradual rebound in medical tourism.

“Medical tourists to Singapore and Malaysia are now at 17% and 1.5%, respectively, of pre-pandemic levels, following the lifting of border restrictions in both countries since April. This, on top of the resilient demand for healthcare services, along with continuing efforts to minimise its exposure to non-Turkey revenue from its Eastern Europe segment, justifies our ‘buy’ call, with a target price of RM7.42,” said the research house.

Nonetheless, one factor that remains an uncertainty for the group is its acquisition of India’s Fortis Healthcare Ltd, which is caught in a legal dispute between the former owners of Fortis — brothers Malvinder and Shivinder Singh — and Japanese drugmaker Daiichi Sankyo Co.

IHH currently owns a 31.1% stake in Fortis. It was supposed to raise its stake by 26% in 2018, but hit a roadblock when the Indian Supreme Court issued a status quo order, following Daiichi’s legal suit against the Singh brothers. The case is still pending judgement from the High Court and, while IHH management has reiterated its commitment to its investment in Fortis and to the Indian market, it still remains to be seen whether it will be able to move forward with the intended acquisition of the 26% stake.

Be that as it may, analysts are still positive on IHH. Hong Leong Investment Bank Research, which has a “buy” call on the counter and target price of RM7.75, says it continues to like IHH for its refreshed strategy to support sustainable growth and the management’s commitment to continuously seek out new growth opportunities.

At the time of writing, RHB Research had a “buy” call on the stock, with a target price of RM7.42.