Tuesday, March 24, 2015

IHH Healthcare

IHH Healthcare: Newswires reported that IHH Healthcare has acquired a 51% stake in Hyderabad-based Continental Hospitals, a 750-bed super specialty facility, for RM167m.

The deal marks IHH’s first direct acquisition in India, despite the group owning a 10.5% stake in Apollo hospitals and having stakes in two 50:50 JV facilities in Kolkata and Hyderabad, as it attempts to capitalize on the nation’s growing healthcare industry, while diversifying its revenue streams from its key markets of Singapore, Malaysia and Turkey.

Analysts highlighted that Continental Hospital generated about US$13m revenue in 2014, and was broke-even on EBITDA level.

Separately, a foreign broker has upgraded the stock to Outperform from Underperform this morning, with a TP of RM6.20 (S$2.31), citing of sustained earnings momentum across its three home markets, with valuation premium justified by a relatively inelastic demand, upper-income niche and possible M&As.

Technically, share price is hovering around its new all-time high of $2.17, with near-term support tipped at the resistance turned support level at $2.08.

At the current price, IHH trades at 49.2x forward P/E. Overall, the street has 9 Buy, 7 Hold and 8 Sell ratings with a consensus TP of RM5.27 (S$1.97).

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