Listing of IHH could boost sector
IHH will be offering 2.23b shares (80% of which will be new shares) for its IPO in KL and Singapore, likely in Jul 12. It is expected to raise US$2b (RM6.4b) in this IPO.
Malaysia’s EPF and SWF Kuwait Investment Authority (KIA) are said to be the biggest cornerstone investors. Other cornerstone investors are said to include BlackRock Inc, Capital Group, Och-Ziff Capital Management Group and IFC (financial arm of the World Bank).
Singapore retail investors would be able to apply for 52m shares (2.3% of the share offering), while 36m shares would be privately placed to investors.
IHH intends to use the bulk of the proceeds to pay off debts. IHH has no fixed dividend policy – before it was delisted, Parkway typically distributes at least 50% of its earnings, while the last time Acibadem distributed dividends was for FY07.
Asia’s biggest hospital operator.
IHH owns Turkish hospital group Acibadem AS (60%), Singapore’s Parkway Holdings (100%), India’s Apollo Hospitals Enterprise Ltd (11.2%) and Malaysia’s Pantai Hospitals (100%) and International Medical University (100%). It has a number of hospital projects (providing about 3,300 beds) in the pipeline, which when completed, could boost to growth.
Possible boost for the sector.
The upcoming IPO could result in greater interest in Singapore’s Healthcare sector, and could possibly lend a slight boost to the share prices of the other SGX-listed healthcare providers. Assuming it raises RM6.4b, this works out to be RM2.86 / share. At an exchange rate of S$1=RM2.430, this translates to a price of S$1.18 / share or a P/E of 35x based on FY12 annualized EPS.
Other regional healthcare peers (excluding Fortis Healthcare (Unrated)) are trading at an average P/E of 23.8x. Raffles Medical (BUY\TP: S$2.67) (its closest SGX-listed peer) is trading at 22.9x P/E. Nonetheless, we note that IHH is a large healthcare provider with about 4,900 beds, and significant global operations that span across Singapore, Malaysia, India and Turkey.
It would be in a good position to benefit from Asia’s growing medical tourism. Regional peers’ do not have significant overseas operations. Hence, a large healthcare provider like IHH would be expected to trade at a premium to peers. Fortis Healthcare, an Indian healthcare provider with over 10,000 beds, is trading at 55x P/E.
http://www.remisiers.org/cms_images/res ... update.pdf