Good morning, thank you for joining us this morning. I'm Penelope from IHH Investor Relations. Welcome to joining us for our Q4 and full year 2022 results briefing, whereby we're doing it via a live video broadcast available on our webcast. With me today, Mr. Joe Sim, our Group Chief Operating Officer, and Mr. Joerg Ayrle, our Group Chief Financial Officer. I also have the pleasure to invite Evren, our Deputy CEO of Strategy and Business Development of Acıbadem. Our materials are also available for download on the IHH website. As for the sequence of event, we will have Joe make some opening remarks before passing on to Joerg to speak about the key financial performance. Before then, it goes back to Joe to speak on the operational highlights as well as the outlook before we move on to the Q&A.
With that, I'll turn the call to Joe. Joe, please.
Thank you, Penny. Good morning, everyone. My name is Joe, and thank you for joining us. It's a pleasure to speak to you, I believe, for the first time for most of us. As you're aware, I'm covering Kelvin's duty after he has stepped down last week. On behalf of management, I would like to thank Kelvin for his leadership for the last three years. Particularly, he has actually instituted a very strong belief that we should always put patients in the center, and that is actually very fundamental to what we do. I believe that that has forged a very strong foundation for us to move forward. At the same time, he has also steered the group through a very difficult COVID period, and we have done very well under his leadership in terms of performance.
Last but not least, on the ESG front, Kelvin has also been very instrumental in helping us lay down the strategic directions as well as the goals for ESG. On behalf of the management, I would like to thank him for this, his contributions. I would like to also at this stage share and also assure all of you that our board and management remains working very closely together to during this transition period. The search process is ongoing. I'm sure this is on top of many of your minds. Rest be assured that the proper process is actually being followed, and I will let the process take its due course. In the meantime, I'm very confident of the team here.
In IHH, we have both the strength and the depth at the group level as well as at the country level to make sure that we continue to strive on the policies, the strategies, and the growth that we are actually working towards over the next year. I'm very confident that all of us are even more united to make sure that we do even better every year that we go through. On this note, before we start the results briefing proper, maybe I would like to also touch on something before we go on. Next slide. All of us at IHH are deeply deepened by the earthquake that happened in parts of Turkey and also in Syria.
At this point, I thought it may be useful for us to share some of the relief effort that we're doing. I think the key thing to note is that our operations in Turkey is very stable and remains stable despite the earthquake. Over and beyond the business as usual, our team in Turkey has done tremendous work in the disaster relief. That's something which I we're very proud of, which I would like Evren to add a bit more color to that. Evren?
Thank you, Joe. Indeed, very sad and devastating event. Starting from day one of the operations, we as a group were very active in the earthquake zone. We had many different ways of supporting the earthquake victims by means of delivering our ambulances from day one, as well as providing food supplies, clothing, many different type of things. Being a healthcare player in the market, we also were very active providing healthcare services. We administered one of the public hospitals complete healthcare service delivery in the region. Maybe just to put in perspective, we supported all the treatment efforts. Now we have mobilized more than 50 of our doctors as well as 200 nurses, which is actively working in the region providing healthcare services to the people.
Like I said, as well as we have other initiatives. I think Joe talked about being united. I would like to also say that IHH Healthcare as our parent organization supported our health efforts by donating $1 million, which will be used to build up a container house village for the earthquake victims affected by the region. I think this is a quite good sign of being united in these hard times.
Thank you, Evren. If I switch the focus back to the results release, there'll be actually four parts to it. The first two parts on the results overview and the financial highlights will be covered by Joerg. After he has covered that, I will come on to talk about the operational highlights as well as the outlook going forward. Over to you, Joerg.
Yeah. Thanks, Joe. Good morning, everybody, to this Q4 earnings release. Before we get into the numbers, just a quick overview on our operations. At a glance, we have reached 70% bed occupancy rates. Again, that's really great across the parameter. Of course, different by countries, and you will see a lot of that in the later sections. Really great performance by the whole organization. 223,000 inpatient admits. This is one of our key indicators for growth. Operational beds, we have nearly 12,000.
We've talked a lot about organic growth, adding another 1,200 in India, another 600 in Malaysia, and we're looking throughout the parameter to open beds and grow organically. That's the most capital-efficient growth that we have, and we are full steam ahead to really fulfill this. On our lab business, 23.4 million lab tests. We are really one of the leaders in the laboratory space in the markets that we operate in, and we'll talk a little bit about that later. We have now 82 hospitals. I don't know if it includes already our Shanghai hospital that we just opened a couple of weeks ago. We operate in 10 countries, and we have seven trusted brands. If we jump right into the numbers, look, super robust performance.
I internally called it a rockstar quarter Q4. Fantastic growth in some of our key markets. Malaysia is doing super well. Our Turkish and European parameters do very, very well and have really contributed to a Q4, where we now say 11% underlying growth, and we've put a little green box around those numbers that we find are the real core underlying performance pre-MFRS 129 financials. It's 11% growth to MYR 5 billion revenue. We have achieved MYR 1.1 billion in EBITDA. That's up 1% from a very strong quarter for in 2021. Net operating income pretty flat compared to a year ago, MYR 424 million. You can really see a very strong underlying performance.
Of course, if you add in MFRS 129, you'll see the numbers in the bridge a little bit later. Of course, you have also noted we have impaired a large part of our Chinese assets. I think prudence dictates that we do look into this. We have promised that we are de-risking the operations, and we are absolutely determined to be on this improvement path. We have sold and closed the Zhengzhou Hospital to Perennial, our joint venture partner. That's a really first good proof point that we are executing in this. I have been together with a team in Shanghai two weeks ago, visited all our operations. We all had a soft opening for our Shanghai hospital. Look, this is a difficult situation coming out of COVID.
China is a complex market. At the same time, there are some gold nuggets that we can lift and look at. However, our overall strategy on de-risking and exiting this market is intact, and we continue to deliver on that. Reported net income after the impairment is MYR 122.6 million, but I think we really need to look at the underlying performance, 11% growth in top line. Really great performance. Thanks to the whole organization for doing this home run at the end of December. On the next page, and that's now the full year. We've reached MYR 18.1 billion. That's also an up of 6%.
This whole equation of coming out of COVID with a drop-off in lab and special services revenues, and a return of patients and tourists, has turned out to be absolutely correct. We have been able to compensate, and if you look at operating income, overcompensate, some softening in the COVID-related revenues, with a very strong healthcare and hospital growth, especially in our core markets. For the year, MYR 18.1 billion. Look, a lot of people have doubted that we could exceed MYR 4 billion in EBITDA. We're at MYR 4.2 billion. I think that's now above $1 billion, clearly above $1 billion U.S. dollars. I think that's a really strong signal for further growth.
I don't think you should be surprised if we exceed the $20 billion revenue mark very soon over the next quarters. If you go to the next page, our long-term tracking. Don't wanna comment too much on it. I think it's the same story. We've normalized out of COVID. We'll stop the COVID-related tracking going forward. If you look at the dotted line, you see how stable our underlying operating performance is. Yes, of course, the green line includes some uplifts on revaluation, non-cash revaluations on MFRS 129, includes some impairments. That's why we are showing here the dotted line, a very strong and solid continuous growth and improvement. On page 10, firm recovery. We discussed it, let me highlight two markets.
That is Malaysia, very strong reported patient volumes, growth, bed occupancy 68%. Very strong top-line growth, excellent EBITDA margins. Really, Malaysia is one of the-Earnings pillars for our business. Is Turkey with a rebound of, we've reported on that in Q1, Q2. We had a little bit of a softening in EBITDA margins due to desynchronization of hyperinflation effects. In Q4, this has bounced back to 27% EBITDA margins as compared to 21% a quarter earlier. It's not on this page, but I wanna really do a call-out to our Hong Kong colleagues. We had in the month of December, the first time double-digit EBITDA results. I think that calls for a great shout-out. Higher operating costs. Inflation is real.
I think we don't need to go through that in too much detail. I think we need to be conscious on how we address this in a mixture of cost management and, of course, price adjustments. Our return on equity is now underlying without the impairment between 7.5%. That's what we've guided to. Our double ROE strategy is intact, we will continue to drive that. On the next page, quick bridge on the net income. It does look on a reported basis, of course, a little bit grim. If you strip out the special effects, especially on the impairment, you see that we're ending up here at MYR 429 million pre-impairment and the MFRS 129 extraordinary items.
That is basically flat to prior periods, and I think that's a great signal. We, of course, recorded the impairment to de-risk our China assets. Let's jump over the next page and go to page 15. Here you see the strong growth in Malaysia. Strong EBITDA growth. Continued growth in Singapore. I think on the EBITDA front we are still a little bit affected by the labs melt off from COVID. The underlying hospital performance in Singapore is very strong. We see very strong patient growth, and you'll see that later in the segment slides. Turkey, Europe, strong growth. India, I guess we do need to discuss a little bit more later, but that is an area we are in discussions with management in India about.
We do need to find ways how to structurally improve our EBITDA performance. I think we are on a good path into these discussions. Again, two pages. Yes, MFRS 129. We have an MYR 89 million impact on the balance sheet reindexing. That is the continuous uplift in reindexing our assets, our non-monetary assets, which are then recorded through the P&L. It's an extraordinary items item. We have then some P&L reindexing. That is the difference between the average exchange rate for the quarter, which is used in our regular accounting. MFRS 129 requires us to shift this to quarter end FX rates, and that creates a little bit of a phasing issue. Then the real impact, the MYR 61 million, is the real impact that will remain with us.
That is the increased depreciation from the increased asset base that we have. On the next page, continued deleveraging of our business. Strong earnings contribution, strong cash contribution from the business. You see that our leverage ratios have reduced. I think if we move to the next page, you see that even better. Net debt to equity stands now at 0.25. Deleveraging and strong cash contribution continues. Of course, if you look at the ROE, it is affected by the one-time effects on impairment. ROCE, however, continues to stay strong and is increasing sequentially. Our double-digit ROE strategy is intact. We will drive capital efficiency going forward through our investment strategy, through eliminating loss makers, improving the earnings of our underlying business.
Look, of course, with inflation, cost management comes into a higher focus, and that will be part of our discussions going forward. Good news for shareholders. We've increased our dividend from MYR 0.06 to MYR 0.07. At least that is what we will propose to have proposed to our board. It's a 46% dividend payout ratio. If you recall, two years ago, our dividend was MYR 0.04. We've nearly doubled our dividend in two years. We're on a very strong streak. We have a very strong belief in the underlying cash performance of the business. We will, of course, stay strong around strengthening and improving dividend yield for investors. With this, I'll pass back to Joe to talk a little bit about the operations.
Yeah. Thanks, Joerg. Okay, back to operations. I think you can see from the numbers here that as a group. Our inpatient admission is actually very stable across all the different markets. In fact, with the return of foreign tourists, medical tourists, we actually seen a uplift in both Singapore, Malaysia, Turkey, India. Almost across all markets which serve medical tourists, that there is actually a significant recovery back to the pre-COVID levels. Which is something which we expect to continue to actually keep us busy for 2023. Next page. Moving forward, I will actually cover by segments, how does the operations performance look like and what are the key drivers for 2023. I'll start with Malaysia first.
For Malaysia, you can see that we have actually fully walked out of the lows during the COVID time. Our inpatient admission has actually for domestic patients, have surpassed the 2019 level. At the same time, with the opening up of the borders in Malaysia in the second half of the year, we're also seeing the return of medical tourists. Over here, notice something quite interesting is that while the revenue has this increase and but you look at the bed occupancies are almost like flat. That's mainly because we've added beds since 2019. Even though you see that it's 71% versus 68%, actually it's on a larger base.
At the same time, Malaysia we also observe a very interesting phenomena because during COVID time in Malaysia, most people who have the common illnesses and all that, they try to refrain from coming to hospital. That's why the revenue intensity last year is actually much higher than this year. Mainly because when they come to hospital, they're usually quite serious already. That, that is actually the situation last year. This year with the recovery of from COVID, we are seeing more of the BAU cases as well. While volume has increased and shot back to pre-COVID levels, we also see the normalization of the revenue intensity, which is something that we expect. By and large, I would say that Malaysia is actually doing very well, and our.
we're actually focusing on how we continue to drive the bed occupancy, increasing our organic capacity as well as M&A moving forward. At the same time, we are also putting a lot of effort in building up our digital presence and outreach to the patients so that we can serve patients better and also increase our outreach to them even better. That's for Malaysia. Next, I'll move on to. Singapore. For Singapore, we can see that the revenue has increased by 4%, and that is actually powered very much by the return of the foreign patients. As most of you are aware, in the first half of 2022, the Singapore government opens us its border.
To the extent that we have many patients, particularly from Indonesia, dragging their suitcase straight from the airport down to a hospital, to seek treatment because they were deprived of access to the health good, healthcare treatment in Singapore for during the COVID time. We are continuing to see that growth, we are actually very optimistic that this actually will continue to be a major source of the revenue growth in Singapore. At the same time, for Singapore, we can also see that the this return of foreign patients is also coupled with our effort to refresh and also our capacity. We're actually adding new services like proton beam, which will see the revenue intensity increase further. That's actually a very advanced, this radiotherapy for patients seeking to for cancer treatment.
At the same time, we are also moving into the ambulatory space with the ambulatory care center, surgical center, which is very much in line with what we are seeing the trend now, where more of the cases are also being done in the ambulatory setting. That is essentially the key thing for Singapore. In Singapore, I will also say that we continue to face the challenge of nursing shortage, which we are working very hard with our college and colleagues, as well as our, this, Ministry to see how we can address that. One of the key things that we have done in 2022 is that we have introduced what we call the Patient Care Assistant to take away the non-nursing load of nurses.
That helped a lot in helping us relieve the stress on the nurses and allow our nurses to be even more productive. Next country. The next one is on Turkey, another of our very good performer for 2022. Turkey and European operations, we saw revenue increase by 18%. That's quite significant. At the same time, EBITDA increased 13% to MYR 358 million. The margins also improved to 27%. That's mind you, is despite all the challenges that we see in terms of the political situation as well as post-COVID, and also the inflation. That's something that's very credible. For Turkey, the average occupancy was 75%, which is very high.
I would just want to say that over here, our Turkish operation has not been affected by this earthquake. We are saddened by the event, but we also take heart that our Turkish colleague has risen well above the challenge and has actually done very well over here. Next one is on European operations. We continue to improve the non-lira contribution for Acıbadem. Actually that is quite significant if you look at the figures here. For the quarter, the non-lira contributions made up 46% of Acıbadem's total revenue, of which 15% come from foreign medical travelers, and 31% comes from the European operations. That is also an area where we are continuing to actually look for opportunities to continue our growth over in this area. Next slide.
One good thing to announce is that in 2023 February, we acquired this Kent Hospital in the Izmir region. That actually is in line with our M&A and growth strategy, that we continue to expand in markets which we see a lot of potential. In Turkey and in Europe, we do see those potential. Next area, India. Okay. There was a healthy recovery of inpatient admission into our Indian operations, which includes both Fortis as well as our Global Hospitals. Revenue increased by 6%. Down here, I think we require a bit of insight to interpret this. We see that the inpatient admission has decreased by 2%, but the revenue intensity has increased by 12%.
That's mainly because our hospitals are actually seeing the return of the more complex cases that is coming back to the hospital post-COVID. Also because of this, higher-end cases like oncology and all that, with the payment system over there is a certain lower margin associated with all these difficult transplant cancer cases and all that. We're happy that they are coming back and volumes are returning back to what we see before COVID. That's something which we are quite heartened. Even though the EBITDA decreased by 8%, but we are happy that the volume is actually coming back. Our doctors are actually going to getting to do what they do best, which is tertiary care.
In fact, in the area of transplant, we are very strong in this. The volumes there are really something that is respectable when we publish the volumes and data worldwide. Next area, Hong Kong. Okay. For Hong Kong, we actually, the revenue increased 29% to MYR 252 million, and the EBITDA also set a new high. This is actually a recovery from COVID. If you recall, the restrictions were very tight in Hong Kong. Despite that, our colleagues have actually done very well in Hong Kong with the recovery. All right, next area. Which IHH Labs. Okay, IHH Lab, as Joerg has mentioned, the COVID volume has tapered off.
What is more important here is that the non-COVID volume is actually gaining strength, and that is actually something that will provide a stable base and a growing base for our lab business. Next area. Outlook. Okay. To sum up a few things here, we expect revenue to grow, and the underlying macroeconomics actually favors us because of the huge demand for healthcare and the supply that we see in the areas, in the regions we operate. There's still a lot of room for growth for us. At the same time, we are also investing in our facilities like Mount Elizabeth Hospital, where we are renovating it so that we can actually have a better facility and also capacity to serve patients much better.
At the same time, we expect us to continue to work with and overcome all the headwinds, such as manpower shortages, inflation and all that. These are actually common across all industry, but in healthcare, manpower shortage is actually something which we are actually working very hard on, which will continue to be a challenge in 2022. Last but not least, we'll continue to pursue our cluster strategy. The key thing to emphasize here is that the team is intact, it's very strong. Even with Kelvin's resignation, we continue to work closely together to pursue the growth strategy that we've articulated all this time. As Joerg has emphasized just now, we stick very tightly to what we have committed to do, and we deliver what we're committed to do.
I bring this to an end, and we'll take Q&A. Yeah.
Thank you, Joe, Joerg, and Evren. Before we start, we'll first take questions from the participants on the call, and if time permits, then we'll move on to the questions from the webcast. With that, with each for each of the participants, if I can kindly request that you keep it to two questions, and then you may rejoin the queue thereafter. With that, operator, can you please proceed with the Q&A? Thank you.
Thank you. At this time, we will conduct the Q&A session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, you need to press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Rachel Tan of DBS. Please proceed with your question.
Hi. Good morning. Good day to all. Nice to have you on the call, Joe. A few questions from me. I think, firstly for Singapore, could you give us a sense in terms of how short of capacity are you at now, or what sort of capacity are you working on now with the labors? Just an update on foreign patients, where they are now and as a percentage of revenue and where is it versus the 2019 numbers?
Sorry, I didn't catch your first question. Your second question is on foreign patients. First question is on capacity in Singapore. Is that correct?
Yeah, I think you
Uh.
Yes. Correct. I think you mentioned there's some shortages in terms of labor.
Yeah.
You know, are you operating at full capacity or how short are you in terms of capacity?
Thank you for your question. I think these are very pertinent questions. In our Singapore operations, if you look at physical capacity, we actually still have room to accommodate more patients. The constraint now is actually the supply of nurses, which for patient safety, I have actually instructed all the country and hospital CEOs that we should not compromise that. We only operate the capacity where our nursing supply allows us to operate safely. That is currently the constraint now. Of course, we're starting working closely with MOM, with MOH, we're actually working around those constraints. Just as last quarter, we have actually added 100 over nurses to our ranks, which is actually quite a significant number. We are progressively working on that.
At the same time, to overcome this, we are also stepping up our efforts and also our, I'll call it aggression, in how we actually go after the recruitment of nurses from overseas. That's something that we do. In terms of foreign patients in Singapore, yes, we covered. We see that the type of case mix and also the type of cases, volume of cases that come back is actually back to the pre-COVID level, which is something that is actually very encouraging. I also like want to thank a lot of our doctors and nurses for working extra hard in the initial period where Singapore opened up because there was a surge and almost a tsunami of the patients coming back. We, but we cope very well.
I think, foreign patients are, I think, the short answer is that we are back to pre-COVID, and we expect it to continue to go strong.
Can I follow up with?
Mm-hmm.
In terms of foreign patients, is that roughly about 25% or 30% of revenue at the moment? In terms of your capacity, are you operating 80%, 90%? Just a rough sense. Yeah.
Okay. In terms of physical bed capacity, we are operating at around 55% to 60% of the physical bed capacity. As I mentioned, that's mainly because we are also constrained by the manpower. That's a total. That actually includes both domestic as well as the foreign patient. Yes, foreign patient revenue has recovered and we're actually seeing a very healthy contribution from that. Mm-hmm.
It's clo-
Okay.
5% of the gross patient revenue for Singapore.
Sorry, I didn't catch you, Pen.
No, I'm saying it's close, as to what Joe mentioned, it's close to that 25% of patient revenue. It's in terms of inpatient admissions as day surgery out of Singapore's revenue.
Mm-hmm.
Got it. Yeah. Thank you.
Thank you.
My next question is, really on Malaysia.
Mm-hmm.
My next question is on Malaysia. I think Malaysia has performed really well at the past pre-COVID levels. I'm just wondering, you know, how sustainable is this recovery and how long more do you think it can go? Is Q4 really where normalized state would be moving forward for Malaysia operations?
For Malaysia, I'll address it in two parts. One is volume, the other one is the case mix and all that. If you look at volume, right? In Malaysia, healthcare, private healthcare supply is really quite short. The demand is much bigger. We do see a lot of room to continue to actually increase. In fact, we are actually, as we are speaking, we are expanding our capacity. Say in, for example, in Pantai, Penang, we're adding another 100 beds to the existing infrastructure. Those are the kind of confidence that we see in the demand in Malaysia itself. At the same time we are also seeing that a lot of the case mix are actually going back to the BAU case mix.
In the initial part of the this COVID period and during the COVID, a lot of patients are avoiding hospital. They only come to hospital when they are very sick. Now we are seeing that they are actually getting back to normal. When they are sick and they need the operation or need treatment, they are actually more willing to come. Based on these two factor, we do see that there's going to be a very healthy and robust continued growth in the Malaysian operations.
Okay. Maybe just quickly, foreign patients from Malaysia, Can you give us a number?
Uh.
The revenue is around 6%, 6% to 7%, and has reached pre-COVID levels. Now that's a good thing because, it's pretty clear that the Malaysian organization has done a lot to really drive marketing and acquisition of foreign patients, and we see this 6% only as a way mark to come to a double-digit
Mm-hmm.
foreign patient contribution also here in Malaysia.
Yeah.
Okay. Great. Thank you so much. I'll get back to the queue.
Yeah.
One moment for our next question. Our next question comes from the line of Amanda Fey of Credit Suisse. Please proceed with your question. Can you proceed with your question?
Hello.
Hi, Amanda.
Good morning.
Yes. Hi, morning.
Thanks for the call. Can you guys hear me?
Yes, we can.
Okay. Hi. All right. Could I just kind of follow up a little bit on Singapore? Of course, you know, I understand that there's a nursing shortage, but, you know, I wanted to understand in terms of bed capacity, because I understand during the last quarter, you know, volumes were affected by 10% because of the shortage in staff. For Q4, you know, has that improved? You know, how has the bed closure situation looked like? Also secondly, following up on that, with the Mount Elizabeth refurbishment, will this affect capacity in Singapore in the next few years?
Yeah. Thanks, Amanda, for the question. Let me address them. I think for the Singapore capacity, definitely we are actually reducing the number of what we call the blocked beds, where we have blocked it because of shortages of these nursing numbers. In fact, we have seen a 50% reduction in the blocked beds compared to the beginning of the year, and we do expect this number of blocked beds to continue to decrease in 2023. Currently, we have about 100 beds that are blocked, and we expect this to decrease to about in the range of 20 to 30 by the end of 2023 as we ease the nursing shortage. That's on the supply side. Your second question is on the Mount E renovation.
Mount Elizabeth renovation, we're actually doing something that, which is what I used to do when I was running IMU, what we call changing the engine when the plane is still flying. Meaning that we are not going to close down the hospital. We are renovating the hospital in pieces. It's like a jigsaw puzzle, where if I renovate one part, I'll close out that part, and then I'll use the other parts of the hospital. We are trying to minimize the impact on the capacity. Having said that, some of the capacity will be affected, because some areas, if they are too near to the renovation site, there'll be noise, dust, vibrations and all that. That's something which, operationally we'll be doing.
There are a few things that there'll be some impact by about, say, 20% of the bed capacity, but that is mitigated by a few other areas. Number 1 is that we're actually working with the sisters hospitals in Gleneagles and as well as in Mount Elizabeth Novena to actually make sure that we schedule the patients and distribute them across. If there's a need to overflow the patients from Mount Elizabeth to Mount Elizabeth Novena or to this Gleneagles Hospital. That's one. Number two is also, when we look at it operationally, there is always a peak and trough across the week. We all know from hospitals, I'm sure as you're covering this, you know quite well, in the middle of the week, that's where occupancy is very high.
Towards the beginning of the week and the end of the week, the occupancy will come down a lot. A lot is also operationally, how then do we work around it to even out the load so that at least we make better use of the beginning of the week and the end of week to actually make sure that the patient wait time for surgeries and the demand is met as much as possible. I hope that addresses your question, Amanda.
Yes, that's very helpful. Thanks, Joe.
Thank you.
If I could squeeze one last question, you know, for Joerg, if you can address this. With some of the cost pressures that are happening, how should we look at margins for this year? Should we expect some erosion? You know, related to that, has IHH introduced some price increases this year across the markets?
Yeah. Thanks, Amanda. I guess, look, cost pressure is real and we look at it from two sides. One is labor, and the other one is primarily electricity and utility fees. If you look at the utility fee development over the last couple of months, you saw a relatively strong increase in the course of 2022. What we do see in the last couple of weeks is that pricing from utilities is softening again. Especially, for example, here in Singapore, which is a main contributor to inflation, but also in Turkey, we do see a softening of the price curve for kilowatt hours in electricity. I think that will somehow soften for us the cost pressure in 2023.
On the labor, look, I think we've discussed this before, right? It's, of course, on the one hand, there is an increase in labor costs, and on the other hand, operationally, we are looking at segregating the tasks of a nurse into more administrative tasks where then, lower compensated individuals can be onboarded to help us improve the pay mix for our overall staff levels. I think this is working really well. There are ways how we mitigate this. Now, look, we did go through price increases. There's no question. We've done that in all of our markets in relation to passing real cost increases on. We've seen that this works until now really well.
Of course, it's an area we have to be cautious with, and we don't want to overprice here, and we wanna be respectful to our customers and patients. Look, it's both, right? We need to have continuous cost management, and the current utility price curve is helping us and at the same time, we will pass price adjustments where there is a need to do that. In short, the answer is I do expect that margins will rather improve than reduce from the various activities that we have put in place to improve our EBITDA mix.
Thank you. That's all from me. Thanks.
Thank you, Amanda.
One moment for our next question. Our next question comes from the line of Nicole Goh of UBS. Please proceed with your question.
Thanks very much. Hi, good morning, everyone. My question is actually, I guess, quite related to the questions that were asked previously. Is regards to revenue. I think you mentioned in your outlook, Joe, that you expect revenue to actually improve in 2023. Just looking at the improvement in revenue, would that mainly come from you opening more beds, given the, you know, shortage of nurses at this point in time? Or, you know, would it come from, I guess, price increases or you actually taking market share from others? Secondly, on the nursing shortage and hence the closure of beds, I know we covered a lot about Singapore, but what about your other markets?
Are you seeing a similar sort of, blocked beds, that's happening there and would that situation actually improve, in the other markets?
Thanks, Nicole. I suppose when you ask about revenue growth, maybe I'll address it at the group level. At the group level, I think York has alluded to it just now. We are actually quite confident, and we do expect 2023 for us to breach the MYR 20 billion mark. That is something which we are very confident of. That's for overall. How we achieve it may differ a little bit from country to country because it's also a function of the health-seeking behavior in each country, and also how we actually complement with the local healthcare system. For example, in Malaysia, we do see that a lot of the growth will be from organic. Of course, we are also exploring some M&A and all that, and they're always under evaluation.
That could also be another source of revenue growth. At this stage, we will not comment any further on that. Suffice to say, organic growth will be strong in Malaysia. Likewise for our Acıbadem operations, I think later I can also ask Evren to add more color. We do expect robust growth in terms of both the demand domestically in Turkey, as well as also for foreign tourism into Turkey and also in our European operations. Likewise for Fortis and also Global Hospitals in India. We do see that it's actually rebounding and growing from strength to strength. I think as just now Amanda has asked, I think one of key thing is also how then do we actually tackle the inflationary pressures?
There's always this tug and pull balance that we have to have. We'll manage that through the various measures which York has outlined. In Singapore, indeed, I think there will be nursing shortages, but we do actually expect that some of the efforts to introduce PCAs and all that to continue to pay off. The rolling out of the PCA has been completed 50% in half of our operations, that will continue in 2023. We continue to recruit them and train them and put them so that we ease the kind of constraint from the supply side. Singapore, I would expect that will be a combination of the volume demand as well as the case mix in terms of intensity.
Of course, where we have to, we will actually have to pass on some of the price increases, through, pass through the patients. That's the thing. Sir, I think you want to add on the Turkey side.
Thanks, Joe.
Mm-hmm.
I think the growth in Turkey, what we're envisioning is a combination of many factors, as Joe said. There's an intensity factor which is coming from basically the price increases that we push through. The volume is still there. Maybe just to put in perspective, in the Q4, what also really helped out our performance is, we started our operations in our newest hospital in Istanbul called Ataşehir. This has an added capacity of 300, roughly 300 beds into our network. But what we have seen, the ramp-up was much faster than what we expected, and we expect that ramp-up to continue throughout 2023. That intensity, this very strong medical tourism, as well as the recent addition of Kent, we expect we will continue having strong growth...
Yeah. In Turkey.
Mm-hmm. In fact, you have to share how.
Thank you. Can I just follow up on that?
Sure.
Ataşehir Hospital.
Sure. Sure. Maybe, just more details on Ataşehir. We opened Ataşehir middle of September. First month of operations in October, we had, like 8% to 9% EBITDA margin. In December, we even reached high teens, close to 20% EBITDA margin level. That's, that's, that shows us the how quick ramp-up happened in Ataşehir. As I said, this is a full-fledged private hospital, 300 beds. We are quite happy to with the ramp-up, but there are still areas, additional capacity that needs to be filled. There are also another expansion plans with it, new departments, new physicians to be added. We're quite happy, but also, encouraged to see a much better performance from Ataşehir.
Mind you, that is a greenfield hospital.
Thank you.
the ramp-up
It is.
phenomenal.
Nicole, you had another question?
Joe, sorry, I just wanted to follow up. Yeah, sorry, I wanted to follow up on the nursing shortage. The nursing shortage, as you mentioned, it's in Singapore. Can I just confirm that the rest of the other markets is not as severe as it is in Singapore?
Do you also need to roll out the PCA in these other markets?
Okay. Okay, as an operator, I'll tell you that I am never satisfied that that is enough. I will say that in all markets, I will always tell the country managers that it is severe because I wanted more nurses. It is very true. In Malaysia, we can still expand more and one of the limiting factor is also in the number of nurses that we can the rate of recruitment of nurses. Likewise in Hong Kong, there is also a shortage of nurses. Actually, the shortage of nurses is a worldwide phenomena and it's not just limited to Singapore alone.
Just that in Singapore we have the added challenge because the government is also recruiting very fast and government's ability to actually absorb the supply is actually quite amazing also. Therefore, a lot of emphasis where in my just now I was sharing was based on Singapore. That doesn't mean that we don't have to overcome the challenge in Malaysia, in Hong Kong and elsewhere that we operate. It still remains a challenge.
Got it. Sorry, just one last question from me, on your India. Any updates? I mean, we had the Supreme Court announce, whatever they announced last year. I think you mentioned that you were gonna seek, legal counsel. Any updates on that?
Look, we are of course in discussions with the regulator. We are in discussions with legal counsel. We are clearly of the view the stay order is lifted. Of course we need to respect the Indian system and we can continue with the MTO once SEBI, the Indian regulator, approves and gives us the green light to go ahead. We'll be respectful to the system and follow due process. Look, of course we're not satisfied. We are held up. Our money is held in escrow. We will do everything we can and step up our efforts to first of all, get our money back or, well, actually get the MTO through and get on the road with the MTO.
Increase whatever share we can increase and then move on with a continuous, very strong growth strategy. While we are respectful to local due process, and look, we are a foreign investor, so we need to be and should be thankful for the opportunity to participate in this market. We also do wanna move on. We've waited a long time and I think it's really about time that we step up our efforts even more and get to more clarity as to this MTO.
All right. Thanks, Nicole. I think we need to move on to.
Thank you.
A question that's on the webcast. It's from Kok Xiang. What kind of impact to Acıbadem do you see for the upcoming Turkish presidential election in May this year? Second question is, based on news, Turkish Energy Market Regulatory Authority indicating that energy prices for industrial use dropped 16% in January 2023 onwards. Is it the first decline in electricity bill? Can you give us the electricity charge in pre-pandemic peak and now? Also how much energy cost accounts for total cost of Acıbadem? Last but not least, what is the reason Acıbadem's EBITDA margin increased to 21.1%. 25.1% from 19.3% Q on Q? Do you see this sustainable? How's the increase of blended pricing in Acıbadem in early 2023?
Thank you so much for the question. I think it's very comprehensive. Let me take it one by one. Elections, I think there's a bit uncertainty right now in the country given the earthquake situation over here. The estimates, we're still expecting elections within 2023. Again, it's very early days to comment on this. With regards to the impact, obviously we don't expect to see any impact at all because as I mentioned several times in these analyst calls, we cater to a certain segment of the market which is really price inelastic, very high quality healthcare services, demand-driven and preferring our hospitals. That's why I don't see any these type of macro or political socio-economic developments. We don't expect to see an effect in our operations. That's that. On the energy, let me give you some guidance.
What happened in 2022 is basically starting from the Russo-Ukrainian War, we saw the energy tariffs increasing quite significantly starting from Q2, and which peaked the Q3 rates, which means our energy tariff almost quadrupled in our operations. Not only in Turkey, but also our European operations. Because of that, the margin erosion coming from the effect of these utility energy costs was almost about 3 to 4 basis points in Turkey and also as well as in Europe. When you look at our margins in 2022 for the 12 months cumulative, you see a decline of 2 to 3 basis points. On the other hand, when you look at our Q4 margins, you will see a resilience which is the steady margin level. That means that peak level has actually started to stabilize, as Joerg mentioned earlier.
As you commented on this, the energy prices are coming down. We see that part of the fixed cost element is now stabilizing.
On the EBITDA margin increase, again, it's a combination of, as I mentioned, intensity, medical tourism receipts going higher, very strong ramp up of Acıbadem Ataşehir Hospital, which were having pre-operating costs during the first three quarters of the year. Then the increase of blended pricing in Acıbadem. Again, as Joerg mentioned, we did push through price adjustments in line with the overall inflationary environment in the market. Our January results are within our expectations.
Okay. Thank you.
Thank you, Evren. Thank you.
Thanks, Evren. Perhaps we have time for one more last question because our management team has to run on for a board meeting. Operator, can we take one more question on the conference call?
One moment for the next question. The next question comes from Divya Gangahar on Morgan Stanley. Please proceed with your question.
Thank you. Just a very short question. I wanted a clarification on the Singapore nurse of nurses, pre-COVID, where are we now? I mean, I understand the patient care system will reduce the need for the overall nurses. Was trying to gauge what's the difference between the current strength versus what it was, say, in 2019. The second one was in China. I mean, any comments on how much more asset impairment do we expect? What is the path forward? What are the various options that are being explored for that business? Lastly, on Turkish EBITDA margin, in the previous call, you know, you had guided for about 25%, we've achieved 27%. Wanted to understand where exactly does this surprise come from?
you know, do you think that 27% is now sustainable, especially given the comments you made on, energy prices? Thanks.
Okay. I'll address the first question, then I'll ask Joerg to answer the second question. In terms of nursing supply, I think as with all other healthcare players in Singapore, we do see attrition every year. What we also see is that the supply of nurses is also replenished. In the recent months, we are very, very thankful to MOM and also MOH for working very closely with the industry to address these shortages. Now we are seeing actually more temporarily registered nurses coming in, and they are actually conditionally registered, which then they become full nurses. We are actually seeing that pipeline growing. So we do expect that this, it will continue to be tight.
There are actually active efforts from all over the different sectors, private sector, government, ministry and all that, working on this together. I will say that, while it remains a challenge, it's something also that, we are very appreciative and thankful for the help that MOM and also MOH has given us as well. Joerg?
Let me address the other two questions. Look, China, I think, we've made a deep cut into the asset base we have. We've basically written off majority of the goodwill we still had on the clinics. We've taken out a material piece of asset value in the other operations. I think we are doing this step because we believe it will relieve us and give us a little bit of headroom, a little bit of time to really get to China into a future stage. I'd like to focus on two things. One is that there is a business. There are employees, there are patients, there are doctors.
We have a duty to run the business at its best and to the max as we can while we are the owner and while we are the promoter of this business. I think we should not confuse this with corporate activities that we do with our M&A team, where we work with CICC, where we work with banks, in order to find ways how to potentially find better owners for this business or people who wanna join us and fund this activity, contribute more local and stronger local context, stronger collaboration with local hospitals and local networks. I think that is the key objective of what we wanna do. The de-risking is in place and we will move forward.
I think this impairment has helped us to give us a little bit of headroom and breathing space to execute on this. Such topics are not easy in a complex market. The regulatory environment in China is complex. I think the partnership landscape in China is complex. Do give us time to execute on this. We've been able to close GCD as we said we would, and we'll execute on the other objectives as well, and we'll keep you posted. Let us not forget, there are patients that come to our clinics and our hospital on a daily basis, and we have a duty to care for them in the best way we can. Now, Turkey, look, 27% is fantastic, and it's really back to the highs that we saw in prior quarters.
Really, all thanks go out to the team there for having done a really fantastic job in getting this back to this performance level. The 25% we've guided to is the long-term guidance that we have for the Turkish and European perimeter. It's fantastic if we achieve 26%. If we have 27% in some quarters, that's great. Let's also remain realistic and help the organization to get through a hyperinflation situation. Get through the tragedy that Turkey is going through at this moment. Be happy for the fantastic results and be realistic as to where we wanna be. 25%, 26% is probably a long-term margin that we see is absolutely doable. If the team there can change this mix over time, that's great.
Let us, for the coming quarters, remain prudent on margin expectations that we have.
Thank you, Joerg. I think we have.
Thank you.
many of the questions. Unfortunately, because we have to go for a board meeting. If there are any questions that we have, we'll be happy to take that offline with you so that we can adequately address all your queries and also your questions. On this note, I would like to thank all of you for attending today's dialogue, and I really appreciate that. It's my pleasure meeting you for the first time. Thank you.
Thank you, Joerg. Thank you, Joe. Thank you, Evren. I know we do have additional questions on the webcast. We will address them offline. I will come back to you on those on the questions. With that, we'll now conclude the IHH Healthcare Q4 and full year 2022 financial results briefing. Thank you for joining us once again. If you have any other questions, feel free to contact me at ir@ihhhealthcare.com. With that, operator, you may disconnect.
Thank you.
Thanks, everybody.
This concludes today's Conference. Thank you for participating. You may now disconnect.