IHH healthcare

IHH healthcare: CIMB notes that 4Q13 and FY13 core EPS were in line, accounting for 30% and 102%, respectively, of house FY13 forecast. SOTP drops on the back of a 26-33% downward adjustment to our FY14-15 EPS estimates, as the house take into consideration FX translation effects going forward. However, the house still find enough growth for earnings, and what is turning around appears to be greater operating leverage from high capex assets, a stronger balance sheet and better cashflow. This prompted an explicit dividend policy, a rarity for a company in expansion mode. The house believes that the bulk of its big earnings will come in 2H14, with some of its newer hospitals driving operating efficiencies going forward. While there seems to be better value being offered by its regional peers, think that the more strategic locations of IHH’s assets in Asia and Turkey will play anchor roles in the medical tourism theme. The house adds that savvy cashflow management, structured capex programme and dividend policy provide the justifications to own this stock once again. Upgrade IHH to an Add from a Hold with TP $1.63