MARC Ratings has assigned ratings of MARC-1_IS and AAA_IS to Pantai Holdings Sdn Bhd’s existing Islamic Commercial Papers (ICP) Programme and Islamic Medium-Term Notes (IMTN) Programme (collectively Sukuk Programmes) with a combined aggregate limit of up to RM15 billion. The long-term rating outlook is stable. Pantai Holdings is a wholly-owned subsidiary of IHH Healthcare Berhad (“IHH” or “the Group”). Pantai Holdings, operating as IHH Healthcare Malaysia, operates 18 hospitals nationwide and contributed approximately 17% of the Group’s consolidated revenue and 19% of consolidated EBITDA in 2024. It remains the largest hospital group in Malaysia by both turnover and profit. Further uplift is anticipated from the full-year contribution of recent acquisitions, such as Island Hospital, and ongoing capacity expansion.

The ratings also reflect the strong operational and financial integration within the Group, including centralised treasury management, unified oversight, and consistent group-wide financial policies. It also incorporates the strong likelihood of support from key shareholders, Mitsui & Co., Ltd and Khazanah Nasional Berhad, underpinned by IHH’s strategic and financial importance to both parties along with their track record of support.

IHH’s strong credit profile reflects its robust fundamentals, global leadership in private healthcare, and clear long-term growth prospects. The Group operates more than 80 hospitals across 10 countries — including Malaysia, Singapore, Türkiye, India, Greater China (including Hong Kong and Shanghai), and selected markets in Central and Eastern Europe — under core brands such as Pantai, Gleneagles, Mount Elizabeth, Prince Court, Parkway, Acibadem, and Fortis, which consistently rank among the top three in their respective markets. As of end-2024, IHH manages over 13,000 operational beds and aims to add 4,000 more by 2028.

Patient volumes grew at a compound annual growth rate of 5.9% from 2020 to 2024, rising from about 680,000 to over 906,000, driven by rising demand for tertiary care and an increasing number of international patients, especially in Malaysia, Türkiye, and India. This volume growth supported revenue and EBITDA increases, with Group revenue up by 16% y-o-y to RM24.4 billion in 2024, followed by a 6% y-o-y rise to RM6.3 billion in 1Q2025. EBITDA grew in tandem with revenue, with margins remaining stable in the low twenties. Operating cash flow also improved, rising to RM4.3 billion in 2024 and RM1.1 billion in 1Q2025. Continued growth is anticipated as capacity expansion efforts advance.

The Group’s total borrowings increased to RM13.7 billion as of end-March 2025 (from RM8.3 billion as at end-2023), driven by the RM3.9 billion acquisition of Island Hospital and ongoing capex, including an addition of nearly 1,000 new beds in 2024. Despite the increase in debt, strong cash flow and capital market access provide ample financial flexibility.

Resilient demand for quality healthcare and IHH’s expansion support its long-term growth. However, industry challenges — rising costs, nurse shortages, payor pressure, and regulatory risks — could weigh on margins and profitability. Nonetheless, the rating agency believes IHH’s established brand, geographic diversification, and ongoing capacity investments position it well for stable operations.