IHH HEALTHCARE BERHAD
SGX:Q0F
IHH Healthcare Bhd - Acquiring Another 30% In Acibadem
- To acquire 30% additional equity interest in Turkey-based Acibadem, bringing its total stake to 90%, via issuance of 524.5m new IHH shares.
- No cash outlay with net gearing unchanged, but enlarged share capital means potential 7.6% EPS dilution.
- We are positive on the consolidation as it accords IHH with greater operational flexibility to reduce FX exposure and divest assets going forward.
Increasing its stake in Acibadem to 90% at no cash outlay
- IHH announced its proposed consolidation of interest in Acibadem Saglik Yatirimlari Holdings (Acibadem) to approximately 90%. This will come in the form of
- exercise of option by Mehmet Ali Aydinlar and his wife to convert around 15% equity interest in Acibadem for c.262.2m new IHH shares; and
- an exercise of a similar option by Bagan Lalang Ventures (a wholly-owned subsidiary of Khazanah Nasional Berhad) to convert around 15% equity interest in Acibadem for c.262.m new IHH shares.
- Mr Mehmet Ali Ayinlar, the founder of Acibadem Holding, will continue to own 10% interest. This transaction is subject to approval from Bank Negara. IHH expects the deal to conclude by end-4Q18F.
~ SGinvestors.io ~ Where SG investors share
Financial impact from the consolidated ownership
- With the enlarged share base and including an one-time acquisition fees of RM3.7m, management estimates potential EPS dilution of 7.6% to IHH's FY17 reported earnings on a proforma basis.
- We expect net gearing to remain unchanged post the transaction (2Q18: 4.2%).
A step in the right direction
- Post this acquisition, IHH will capitalise US$250m equivalent of Acibadem's existing subordinated loans which are currently supported by Acibadem’s shareholders, thereby reducing its FX exposure from the current US$680m (as at end-2Q18).
- This consolidation of ownership also allows management more financial and operational flexibility to restructure its Turkish business, which possibly includes divestment of some non-core assets and lowering its FX exposure to an estimated level of US$200m-250m. Management remains open to swapping Acibadem's foreign debt to lira, once the currency stabilises.
- We continue to like IHH for its regional presence and premium healthcare offering.
- Upside/downside risks could stem from the turnaround of Gleneagles Hong Kong and Turkish lira movements.
NGOH Yi Sin
CGS-CIMB Research
|
https://research.itradecimb.com/
2018-10-08
SGX Stock
Analyst Report
6.630
Same
6.630
