IHH HEALTHCARE BERHAD Q0F.SIGrowing in India with Global
- Acquiring 73.4% stake in India-based Global Hospital for INR12,838m (MYR 819m).
- Acquisition in line with stated strategy; funded with internal cash/ borrowings.
- Expands presence in India with acquisition; immediate contribution minimal.
- Maintain HOLD, TP unchanged at RM5.41/S$1.80.
Acquires 73.4% stake in Global Hospital.
- IHH has entered into an agreement to acquire a 73.4% stake in Global Hospital (GH), which currently has a network of 5 hospitals and 1,100 operational beds. The purchase consideration is INR12,838m (MYR 819m) and will be funded by internal resources and bank borrowings. The exact valuation and financials of GH are not disclosed but management indicates that EBITDA margins are in the teens.
- Based on proforma figures, we estimate that GH’s revenue and EBITDA contribution is c.8% and c.5%, respectively.
In line with strategy; presence in 5 key metros.
- IHH had previously stated its interest to expand in India, and this acquisition is in that direction. With the acquisition of Global Hospital, coupled with its recent acquisition of Continental Hospital, it will have 1,900 operational beds and with potential to expand to 4,000 beds in existing facilities across 5 key metros across India.
- Management indicates that its investment stake in Apollo Hospital did not present any limitations to this acquisition.
Forecasts unchanged for now; Maintain HOLD, TP remains at RM5.41/ S$1.80.
- In our view, this latest acquisition further builds on IHH’s presence in India and adds another avenue of long-term growth for the group. At this juncture, we estimate that financial contribution is not likely to be material. As such, we are maintaining our forecasts for now.
Andy SIM CFA | http://www.dbsvickers.com/ DBS Securities 2015-08-31
1.80
Same
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