PETALING JAYA: IHH Healthcare Bhd is bracing for an impact from the plunge of the Indonesian rupiah and the Malaysian ringgit against the Singaporean dollar, its top management said yesterday.
The hospital operator’s managing director Dr Lim Cheok Peng said at a press conference call yesterday that medical tourists from Indonesia presently made up a sizeable 18%-20% of IHH Singapore’s total patient volume while about 4% of medical tourists were from Malaysia.
“Singapore being the biggest contributor in terms of revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA), (this) may have an impact as a result of this shift.
“Because of the depreciation of the rupiah and the ringgit against the Singapore dollar of late, there will be an impact as a result of this,” Lim said.
“We see a little softening of the market (in Singapore).
“We hope this is only for the short term and things may normalise itself.
“We will be in trouble again, you know, if the rupiah crashes to 16,000 to the US dollar such as what had happened in the Asian financial crisis,” he added.
Lim noted that there would be affordability issues for medical tourists at its Singaporean hospitals should the rupiah and the ringgit plunge against the US dollar.
Its chief financial officer Tan See Haw said that this was seen in the second quarter for financial year 2013 ended June 30.
During the period, Singaporean patients’ admission growth outnumbered foreign ones.
“You cannot avoid the short term implications of currency volatility, but the demand in the long term for healthcare is such that it will grow on demographic trends,” Tan said.
Based on these factors, the company will continue pursuing a growth strategy to expand bed count and is expected to add 3,300 beds over the next three years for its markets excluding Hong Kong from 4,700 beds at the moment.
“We should exceed 8,000 beds come 2017 if you include Hong Kong.
“We should have our presence through 46 hospitals then,” Lim said.
IHH yesterday reported its second quarter net profit, after minority interests excluding exceptional items and the recognition of the sale of medical suites, jumped 60% year-on-year to RM188.7mil.
The jump was due to the rise in EBITDA, savings in finance costs from loan repayment and a one-off RM22mil tax credit from the Singaporean tax authorities.
“The rise in EBITDA is due to growth in existing operations and continued cost efficiencies,” it said.
Its revenue, excluding recognition of the sale of medical suites, grew by 14% y-o-y to RM1.68bil from RM1.48bil while EBITDA registered a 20% rise y-o-y to RM419.6mil from RM349.2mil.
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