IHH Annual Report 2018

KEY GROWTH MARKETS – GREATER CHINA In China, we have eight ParkwayHealth Medical Centers under our auspices. In Hong Kong, we operate the 500-bed multi-specialty Gleneagles Hong Kong Hospital, which opened in March 2017. In our Greater China portfolio, we also operate the ParkwayHealth Central Hong Kong Medical Center and the Angsana Molecular and Diagnostics ancillary service. Performance Highlights Revenue from North Asia increased 50% to RM499.6 million from RM332.7 million as Gleneagles Hong Kong Hospital continues to ramp up and increased its top line contribution since its opening. We have also seen EBITDA losses narrowed to RM208.7 million as Gleneagles Hong Kong Hospital’s start-up losses continue to decrease as a result of operating leverage. The new hospital continues to show encouraging signs as utilization is improving quarter on quarter aided by strong inpatient revenue intensity from the hospital’s ability to undertake complex procedures. In China, the new hospitals will complement IHH’s existing medical centres that provide primary and specialist care to the premium self-pay or corporate-insured segment. Construction of Gleneagles Chengdu Hospital is moving ahead and, it is slated to open in late 2019. Construction of Gleneagles Shanghai Hospital in Hongqiao is also progressing well, and it is slated to open in late 2020. Consequentially, we would start to incur capital expenditure and pre-operating costs leading up to their phased bed opening. Expansion Pipeline Type Hospital Greenfield Gleneagles Chengdu 350 bed capacity by 2019 Greenfield Gleneagles Shanghai 450 bed capacity by 2020 What we do COMPLEMENTARY ANCILLARY SERVICES SECONDARY & TERTIARY CARE PRIMARY CARE QUATERNARY CARE Outlook Private hospitals in China generally cater to the higher-income population, but they have also seen a growing demand from the middle class. A population of eight million in urban Chengdu makes it the fifth largest city in China. Chengdu has a strong supply of medical talent, with the presence of Sichuan University’s West China Medical Center, ranked third in China for medical education. In the recent years, the city has received a massive influx of capital as it opens itself up to foreign investment. This is evidenced by Chengdu’s GDP, which grew an impressive 70% from 2012 to 2017. The continuous investment and the attractive proposition on the back of an increased urban population bode well for Gleneagles Chengdu Hospital. In Shanghai, the municipal government has released a proposed guideline that aims to inject flexibility to the healthcare service industry. Likewise, this is expected to bode well for Gleneagles Shanghai Hospital. With the continued ramp-up of operations at Gleneagles Hong Kong, we expect the hospital to continue to contribute to the Group’s revenue and EBITDA. KEY FACTS RM499.6 million Revenue (RM208.7) million EBITDA 51 Performance Review