IHH analyst briefing

IHH analyst briefing: Key summary pts. Just ended this morning which was well attended with a good mix of local/foreign houses. Mgt appears very positive on prospects, indicating strong growth across all mkts and the defensive nature of the healthcare business. With the acquisition of Acibade and its assets in Turkey, Turkey now forms the biggest rev contributor to the grp (38%), followed closely behind by SG (36%) (Note of subsidiary stake in Turkey). SG however maintains the highest pricing power among the countries IHH operates. Grp also showed that synergies have been increasing ever since grp's acquisition/consolidation, via the sharing of costs e.g Procurements etc. Key questions asked by various analysts as follow: 1) What kind of leases/ownership structure will the grp adopt going forward: Mgt note that ownership of medical suites would depend largely on the country demographics and will maintain current model for the diff countries. (In SG sale of medical suites to Drs, In Msia Lease out to Drs.) 2) What is Mgt view on its competitiors: #1 player in Turkey and expected to remain so. #2 player in Msia but grp has higher margins vs mkt leader KPJ grp. Grp services largely the local population in Msia (90% of patients are locals) In SG, the main competitor is the govt hospitals, but the turnard time and efficiency of the private hospitals is viewed to be way ahead vs govt hospitals (e.g waiting time, procedures etc). In SG 50% of patients are foreigners. 3) Mgt will not divest Novena Medical Suites to PLife REIT for now. 4) For Novena medical suites, 40-45% occupancy is needed to break-even, and phase 2 will be launched by 2H13 5) In Steady states occupancy rate should average at least btwn 60-70%, although rev per patient is determined more by intensity rather then by occupancy. 6) Going forward, aims to expand into China, HK and India 7) Capital Structure going forward: Net Debt/ Ebitda max at 4x. Capex in the near future will be funded by internal cashflows and borrowings.