MIDF Research is retaining its Neutral recommendation on IHH Healthcare with a discounted cashflow (DCF) target price of \u00a0RM6.58.<\/p>\n
The research house thinks that despite the resilient demand and growth for healthcare services across all its home markets, they remain wary of 2017 as challenges persist.<\/p>\n
\u201cThis is in terms of the continuous increase in operating costs, cost of living in its home markets as well as, inflation in personnel wages. This is coupled with the volatile movement of the currency exchange which might pose a risk of exchange loss on its borrowings.\u201d\u00a0<\/p>\n
\u201cThat said, we continue to be long term positive on IHH\u2019s fundamentals as its robust balance sheet with a gearing ratio of 0.21x and cash position of RM2.1b will continue to ensure the prospects of the company remains intact,\u201d it noted.<\/p>\n
IHH Healthcare via its wholly-owned subsidiary Pantai Medical Centre Sdn Bhd (PMCSB) has entered into a sales and purchase agreement (SPA) with YNH Hospitality Sdn Bhd (YNHSB) and Kar Sin Sdn Bhd (KSB), a wholly-owned subsidiary of YNH Property Bhd on 26 January 2017.\u00a0<\/p>\n
It is for the proposed acquisition of a parcel of freehold land together with a five-storey purpose-built private hospital with 384 surface carparks \u2013 formally known as Pantai Hospital Manjung \u2013 located in district of Manjung, in the state of Perak Darul Ridzuan. The proposed acquisition is for a total consideration of RM63m and is expected to be completed within three months.<\/p>\n
PMCSB is currently leasing the land and property from KSB since 2014. The acquisition is expected to result in cost savings for IHH in the long run. It will also enable IHH to benefit from the appreciation of the property.<\/p>\n
KSB is currently still the registered owner of the land and property despite having sold the property to YNHSB back in March 2015. This is due to the mutual agreement between the two parties which results in KSB being the registered owner of the property while YNHSB is the beneficial owner of the property.<\/p>\n
As at 31 Dec 2015, the net book value of the property is RM51.17m. As such, IHH is planning to purchase it at a premium of +23.5%.\u00a0<\/p>\n
\u201cHowever, we believe that the potential future savings in operations and future bed expansions will more than outweigh the premium paid.\u201d<\/p>\n
IHH intends to fund the acquisition either via borrowings and\/or internally generated fund.\u00a0<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
MIDF Research is retaining its Neutral recommendation on IHH Healthcare with a discounted cashflow (DCF) target price of \u00a0RM6.58. The research house thinks that despite the resilient demand and growth for healthcare services across all its home markets, they remain wary of 2017 as challenges persist. \u201cThis is in terms of the continuous increase in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-79","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/79","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=79"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/79\/revisions"}],"predecessor-version":[{"id":5907,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/79\/revisions\/5907"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=79"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=79"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=79"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}