Yahoo Finance IHH’s investments in emerging tech and AI could secure its future: UOB Kay Hian
IHH is invested in health-tech companies Doctor Anywhere and Us2.ai through its Innovation Fund.
UOB Kay Hian has maintained its “buy” recommendation for IHH Healthcare with an unchanged target price of RM6.80 ($1.99). In his report dated July 13, analyst Philip Wong says that IHH’s “future-proofing” investments are creating opportunities with emerging technologies that could prove valuable to safeguarding its long-term outlook.
He notes that IHH recently hosted a roundtable discussion on emerging technology and the healthcare applications of artificial intelligence (AI). At the discussion, representatives from Doctor Anywhere and Us2.ai — companies in which IHH has invested through its Innovation Fund — provided a preview into what the future for IHH and the healthcare industry holds.
According to Wong, the two investee companies are startups that are at the “frontier” of AI and technology in the healthcare space. Doctor Anywhere enables the consultation of doctors online, home care service and the delivery of medication, while Us2.ai offers software to facilitate the detection of multiple disease conditions of the heart.
IHH participated in Doctor Anywhere’s Series B and C funding rounds in 2020 and 2022, respectively. Through multiple rounds of funding, Doctor Anywhere has raised US$136 million. Meanwhile, Us2.ai raised US$15 million through its Series A funding round in April last year.
“Should IHH’s investment in Doctor Anywhere and Us2.ai return a dreamy 10x return, it is still negligible to IHH’s overall valuations by our estimates. However, the insights and potential access to these technologies could prove more valuable to securing and insulating IHH’s future,” says the analyst.
Wong believes the key takeaways from the discussion surrounding AI in healthcare include enhanced diagnostics and personalised treatment.
In enhanced diagnostics, AI can assist healthcare professionals in diagnosing diseases by analysing complex medical data such as medical images, genetic information and patient records with Us2.ai. “AI algorithms can quickly identify patterns, anomalies and potential risks, leading to earlier and more accurate diagnoses,” he explains.
AI also enables personalised medicine by analysing vast amounts of patient data, including genetic profiles, medical history, lifestyle factors and treatment outcomes. This information can help identify the most effective treatment and intervention for individual patients.
Additionally, AI also allows for remote monitoring and telemedicine. AI-powered devices and wearables can continuously monitor patients' health conditions, collecting real-time data on vital signs, activity levels and other health metrics. AI algorithms can analyse this data to detect early signs of deterioration or abnormalities, enabling timely interventions and remote patient monitoring, Wong explains.
The surgical application of AI-powered robots also means that precision can be enhanced, while invasiveness is minimised and patient outcomes are improved. Outside of surgery, IHH head of innovation Elizabeth Han notes that robots application could be applied to food and medication deliveries within a hospital setting.
Meanwhile, Wong adds that IHH’s vast network of hospitals across multiple regions allows it access to valuable patient data and emerging technology to better future-proof itself.
The analyst has maintained his sum-of-the-parts (SOTP) based target price of RM6.80 for IHH, implying a 37.4x FY2023 ending Dec 31 price-to-earnings ratio (P/E) or around 1 standard deviation (s.d.) below its five-year mean P/E.
He believes the company’s valuations appear “decent” with its resilient yet defensive three-year earnings FY2022 to FY2025 compound annual growth rate (CAGR) of 4.2% and its sound track record. IHH’s attractive valuations and decent earnings growth outweigh the hyper-inflationary risks associated with Acibadem, adds Wong.
Key downside risks to his forecast include execution risks,a shortfall in turning around Fortid and heightened regulatory hurdles.
As at 2.28pm, shares in IHH were trading 3 cents or 1.81% up at $1.69.
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