HMI

HMI: The hospital operator surged to a high of $0.405 (+11%) in early trades after disclosing that it has received non-binding expressions of interest for its 49%-owned Mahkota Medical Centre in Malacca, with IHH and Sime Darby reportedly the potential bidders.

While management indicated that there is no firm decision on its potential sale at this moment, sources reveal that the group is reportedly working with Credit Suisse to divest the 266-bed hospital for US$250m.

Assuming the touted price for HMI's crown jewel is true, this translates to an estimated valuation of 27x FY6/14 earnings, for the asset, which generated 72% of its revenue and nearly the group's entire profit.

If the deal materialises, HMI will reap $163m for its 49% owned stake, representing 77% of current market cap.

HMI also owns another hospital, Regency Specialist Hospital in Johor, as well as provides healthcare education at the HMI Institute of Health Sciences in Singapore and Mahkota Institute of Health Sciences and Nursing in Malacca.

At the current price, HMI is trading at 28.5x trailing P/E and 4.9x P/B.