Thursday, August 23, 2012
IHH Healthcare: Deutsche initiates Coverage on stock with Buy Call and TP RM3.55. Note that IHH ranks among the largest private healthcare companies globally. Positioned in the higher-growth healthcare markets of Asia and CEEMENA, strong capacity expansion should drive robust two-year (FY12-14E) adjusted EBITDA growth of 26%. Mgt’s expertise, branding and balance sheet capacity should also give IHH an edge in pursuing new opportunities. TP implies 19x FY13E adjusted EV/EBITDA, or a 26% premium to its Asian healthcare peer average of 15.1x. Believe the valuation premium is justified as IHH is 4-5x the size of the market leaders in Thailand and India and has a larger footprint and a stronger forecast growth. Believe that IHH should also trade at a premium to Parkway Holdings’ historical 17x EV/EBITDA from 2006-10.