IHH

IHH: 4Q12 results broadly in line. Core net profit at RM147m (+53% QoQ, 38% YoY), with EBITDA of RM276 m (+9% QoQ, 81% YoY). All core markets witnessed inpatient volumes growing QoQ and YoY. In Singapore, Novena’s EBITDA losses have narrowed and expect to break even during 2013. At Acibadem, the proposed recapitalisation was completed in 4Q12 replacing the expensive debt—should translate to Group cost savings of US$11 m in FY13. Overall, the Group EBITDA margins were maintained at 21% in FY12 excluding start-up losses. Mgt sounded confident of improving Group margins as Novena starts contributing and more synergies are realised across various regions. Most of the expansion plans in core markets are on track and should be completed by 2015. Beyond 2015, the board will consider the expansion strategy at a later stage. Mgt sees India and China as the biggest opportunities for growth in the medium term. A dividend policy will probably be framed by end 2013 The stock currently trades at 17x FY13e adj EV / EBITDA. CIMB keeps at Outperform with TP $1.53. Sees catalysts from a ramp up of Novena Hospital’s operations and revenue intensity in all its three markets. Likes the co’s defensive earnings and size. Deutsche keeps at Buy with TP RM 3.55 (S$1.42). Likes the co for its large regional foot print and longer term growth potential. Credit Suisse keeps at Outperform with TP RM3.75 (S$1.50). Nomura however keeps at Reduce, with TP RM 2.81 (S$1.12), citing rich valuations.