PETALING JAYA: There have been “buy” calls for IHH
Healthcare Bhd from several research houses due to the company's exposure to
the regional healthcare industry as well as growing affluence in the markets in
which it has a presence.
Among those that made the call in
recent days were DBS Vickers Research (Singapore) Pte Ltd, UBS Investment
Research, Credit Suisse and Deutsche Bank.
DBS Vickers Research's price
target for IHH Healthcare was S$1.38 (RM3.44) per share while UBS Investment's
price target was RM3.80 per share.
Bloomberg also reported that Credit
Suisse had rated IHH as an “outperform” with a target price of RM3.75, while
Deutsche Bank also has a buy call on the group with a target price of RM3.55
per share.
Known as Asia's biggest hospital
operator, IHH Healthcare had made a successful dual listing on Bursa Malaysia
and Singapore Exchange (SGX) last month.
The group's US$2bil (RM6.24bil)
initial public offering at RM2.80 per share was the third largest IPO (initial
public offering) in the world this year after Facebook Inc and Felda Global
Ventures Holdings Bhd.
DBS Vickers Research said its
target price of S$1.38 per IHH Healthcare share was 36 and 30 times financial
years 2013 and 2014 forecast price-to-earnings.
“While this is a premium to
regional healthcare peers, we believe IHH offers investors growth as well as
leading healthcare market exposure in various countries, hence it should
command a scarcity premium,” said DBS Vickers Research.
The research unit in Singapore
said it believed the current industry trends favour IHH's growth over the next
few years.
“These include ageing population,
developing healthcare markets in Asia, rising affluence and increasing medical
tourism in the region.”
DBS Vickers Research said it was
forecasting a topline compound annual growth rate (CAGR) for the financial
years 2011 to 2014 of 16.4%, driven by IHH's expanding network, higher patient
load as well as intensity.
“Coupled with margins expansion
as operating efficiencies increase, as well as lower interest expenses, we
project a robust net profit CAGR of about 55%, reaching RM920mil in 2014.”
Meanwhile, UBS Investment
Research said with home markets in Singapore, Malaysia and Turkey, IHH has
exposure to the fast-growing Asia and CEEMENA (Central and Eastern Europe, the
Middle East and North Africa) regions.
“These emerging regions all
exhibit classic healthcare growth factors-an aging population, rising affluence
and urbanisation, and an increasing percentage of gross domestic product (GDP)
dedicated to healthcare.”
UBS Investment Research estimated
that IHH was trading at enterprise value/earnings before interest, taxes,
depreciation and amortisation or EV/EBITDA of 24, 20 and 16 times for 2012,
2013 and 2014 respectively.
“However, we estimate it would
take five to six years for the recently opened Mount Elizabeth Novena Hospital
in Singapore to fully ramp up.
“Excluding the Mount Elizabeth
Novena Hospital, the stock is trading at EV/EBITDA of 18, 16 and 13 times for
2012, 2013 and 2014 respectively, which was a 15% premium to Asian peers, it
said.
According to Bloomberg data,
there were six Buy and three Hold calls from research analysts, with an average
price target of RM3.32 per IHH Healthcare share.
IHH Healthcare's share price
closed 1 sen lower to RM3.11 on Bursa yesterday, while it finished unchanged on
the SGX at S$1.24.
THOMAS HUONG
Business & Investment Opportunities
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