Our portfolio company TNH Hospital Group (TNH) held its 2026 annual general meeting (AGM) in May at its new hospital in Lang Son, northern Vietnam. This was the company's first AGM under its new leadership, as Giang Nguyen, Kenno's Head of Investment and TNH's newly appointed Chairwoman, chaired the meeting.
Management set out a clear three-year strategy: no further new hospital openings, less capital expenditure, and more efforts on ramping up existing facilities. Growth targets are defined at the individual hospital level rather than for the group as a whole, raising accountability across the organization and giving management a clearer basis for tracking progress and reallocating resources where needed. This transition marks a more disciplined growth phase for TNH, where the focus shifts from building capacity to generating returns on the capital already deployed.
TNH enters this phase with four hospitals either operating or preparing to open, including Thai Nguyen International Hospital, TNH Pho Yen, TNH Viet Yen, and TNH Lang Son. By end of 2025, the Board concluded that rapid expansion had outpaced the group's operating capacity, and the strategic focus has since shifted accordingly.
Over the next three years, TNH targets annual investment of approximately VND 80–90 billion (around USD 3.1–3.5 million) to be spent on incremental upgrades at existing facilities, adding beds, opening specialized centers such as cardiac intervention and dialysis units, and improving VIP patient facilities. With revenue growing approximately 30% on average over the past three quarters, supported by a recovery at established hospitals and improving utilization at the facility opened in late 2024, the company expects to fund this phase from operating cash flow rather than additional capital raises.
Among new facilities launching this year, management views TNH Lang Son as the most strategically important project, as it can draw on lessons from TNH Viet Yen's slower early ramp-up to optimize operations from the outset. The hospital is a 10-floor facility with 16 clinical departments and 300 beds, located in a densely populated area with relatively strong local income levels. TNH has concentrated its strongest medical and operational staff there ahead of opening, and the hospital is better prepared on both licensing and staffing than previous projects.
TNH Lang Son is awaiting its official operating license from the Ministry of Health, expected in June–July 2026, after which it will begin accepting patients. If operations begin this month as planned, the hospital targets approximately 300 outpatient visits per day and annual revenue of around VND 75 billion (approximately USD 2.9 million) in its early stage. At that pace, TNH Lang Son is expected to reach breakeven before 2028, broadly in line with TNH Viet Yen, which opened in late 2024 and is expected to generate profits in 2027, reflecting the faster ramp-up TNH is targeting for its newer facilities.
With the expansion phase behind it, TNH's next priority is improving profitability through stricter cost controls and higher revenue per patient across its existing hospitals. Board salaries were cut 20% at the start of 2026, while medical and nursing staff pay has been protected and, in some cases, increased, reflecting rising competition for qualified healthcare workers in Vietnam. Giang, as Chairwoman, has committed to reducing supply waste, negotiating directly with suppliers to remove intermediary costs, and restructuring underperforming senior management roles. As no new facilities are being added, depreciation and interest expenses are expected to ease from 2027, improving the group's cost structure.
We view 2026 as a transition year for TNH, with operating profit and cash flow expected to improve meaningfully from 2025 levels. With faster ramp-up from newer facilities and cost discipline applied across the organization, TNH is on track to return to profitability from 2027 and grow earnings on a more sustainable basis.
The Kenno Vietnam Fund invests in fundamentally sound Vietnamese companies at attractive valuations. TNH represents our healthcare holding, where we see a clear path to improving profitability as the group shifts its focus from expansion to operational performance across its hospital network. If you would like to learn more about the fund or our investment approach, feel free to reach out to us.