IHH Healthcare on market uptrend

Despite previous day’s losses, it’s still trading above listing price

IHH Healthcare Bhd managed to recoup part of the previous day’s losses after the moratorium for its 22 pre-initial public offering cornerstone investors ended last Friday.

PETALING JAYA: IHH Healthcare Bhd managed to advance, recouping part of the previous day’s losses after the moratorium for its 22 pre-initial public offering cornerstone investors ended last Friday.

At 5pm yesterday, the stock closed up four sen to RM3.25, with 6 million shares done. At RM3.25, IHH Healthcare is still 45 sen or 16% above its listing price of RM2.80 last July when it raised RM5bil.

Alliance Research initiated coverage on IHH Healthcare with a “sell” recommendation and a target price of RM2.86 based on its sum-of-parts valuation.

“In view of its aggressive expansion plans, we are projecting a strong core earnings growth of 136.7%, 76.5% and 22.1% for the financial years 2012 to 2014 respectively. Although we remain optimistic of the group’s long-term growth prospects, we believe that its share price has run ahead of its fundamentals,” it said.

Alliance Research said IHH Healthcare was trading at a forward price-to-earnings of 34.1 times, which it described as rich and provided limited upside potential.

“Furthermore, its low calendar year 2013 dividend yield of 0.2% is also not attractive and non-supportive of its rich valuation, in our view,” it said.

Asia’s largest hospital operator shed nine sen, or 2.7%, to close at RM3.21 on the local bourse on Tuesday, trading between RM3.17 and RM3.31 with a hefty 23.08 million shares changing hands.

It was one of the most active counters on Bursa Malaysia.

In view of its aggressive expansion plans, we are projecting a strong core earnings growth of 136.7%, 76.5% and 22.1% for 2012 to 2014 respectively. — ALLIANCE RESEARCH