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BIMBSec - IHH Healthcare - 20120724 - IPO Note

BIMBSec - IHH Healthcare - 20120724 - IPO Note

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BIMB SECURITIES RESEARCH
MARKET INSIGHT
Tuesday, 24 July 2012
IPO Note
PP16795/03/2013(031743)
 
| 1
Buy 
Target Price
RM3.30Offer Price RM2.80
KLCI1,636.17ListingMAINSectorConsumerShariah CompliantYIssued Shares (m)8,057.1Market Capitalisation (RMm)22,589.8Estimated Free Float33%
Majority Shareholders
Khazanah Nasional46.80%MBK Healthcare20.06%
Details of IPO (RMm)
Institution Placement 498.01
 MITI Tranche 360.00Global Institute Tranche 138.01
Malaysia Public Offering
Malaysia Public
208.51
 Bumiputera 80.57Non-Bumiputera 80.57Eligible Directors 4.50Eligible employees 22.59Business associates 20.27
Singapore Offering 140.64
 Singapore public 52.00Singapore placement 36.00Eligible Directors 3.75Eligible employees 16.60Business associates 32.28
Cornerstone Offering 1,387.50TOTAL 2,234.65
Tentative Dates
Closing for Application12-Jul-2012Listing25-Jul-2012
Utilisation of Proceeds (RMm)Details of utilisation RMm
Repayment of bank4,662.76Working Capital and General279.64Estimated Listing Expenses 187.60
Total 5,130.00Thong Pak Leng
pakleng.thong@bimbsec.com.my03-26918887 ext 186
IPO Note
 – 
IHH Holdings
An Integrated Healthcare Provider
IHH Holdings provides a full spectrum of healthcare services, from primaryhealthcare clinics to secondary and tertiary hospitals.
It is one of the world’s
largest healthcare providers with an estimated market capitalisation of RM22.6bn. At the moment, IHH global healthcare network operates over 4,900licensed beds encompassing 30 hospitals. In addition, the group have morethan 3,300 new beds in the pipeline to be delivered through new hospitaldevelopments in Malaysia, Singapore, Turkey and other regional countries. Weare positive on the outlook of IHH given its nature of being in a recession proof industry and strong market positioning. We value IHH at RM3.30 based on 30xPER over FY13 EPS of 11sen. With potential upside of more than 17%, werecommend IHH a BUY.An integrated healthcare provider
. The business portfolio of IHH includeintegrated healthcare business, ancillary healthcare business, projectconsultation and education besides investing and hold equity interest in Plife
REIT which is one of the Asia’s largest healthcare real estate investment andApollo, one of the India’s largest private healthcare providers.
The maincomponent of IHH includes Parkway Pantai Ltd (PPL), Acibadem Holdings andIMU Health (IMU).
Strong team of medical specialists.
At present, IHH has about 3,260 specialistswhere about 1,200 are based in Singapore or about 90.0% of the total number of private specialists in Singapore whilst 760 are in Malaysia with the balance of 1,300 in Turkey.
Continue to grow.
Presently, IHH global healthcare network operates over 4,900licensed beds in 30 hospitals. In addition, the group have more than 3,300 newbeds in the pipeline to be delivered through new hospital developments inMalaysia, Singapore, Turkey and other regional countries.
Strong earnings growth ahead
. For FY12 and FY13 we expect IHH to register netearnings of RM763.3m and RM883.7m respectively representing growth of 478.1% and 15.8% respectively.
Earnings Table 
FY 31 Dec (RMm) 2009 2010 2011 2012E 2013E
Revenue 3,946.3 4,506.7 5,190.8 6,011.0 6,996.1EBITDA 774.6 888.8 1,029.7 1,424.6 1,647.2
Pretax profit 470.3 155.1 333.4 1,083.4 1,254.1
Tax(6.8) (76.4) (87.8) (227.5) (263.4)  MI(36.3) (37.3) (113.6) (92.6) (107.1)  Net Profit 427.2 41.5 132.0 763.3 883.7
Core Net profit(26.3)75.3(45.9)763.3 883.7
Core EPS (sen)(0.3)0.9(0.6)9.5 11.0 Core EPS growth (%) 0.0% -400.0% -166.7% -1683.3% 15.8%DPS (sen) n.a.
 
n.a.
 
n.a.
 
n.a.
 
n.a.
 
NTA/ share (RM) 0.27(0.64)0.59 0.69 0.81Net gearing (x) 0.0 1.9 0.1 net cash net cashPER (x)(933.3)311.1(466.7)29.5 25.5 Div. yield (%) n.a. n.a.
 
n.a.
 
n.a.
 
n.a.
 
P/ NTA (x) 10.2(4.4)4.7 4.0 3.4
 
 
24 July 2012 IPO Note: IHH Holdings
 
www.bimbsec.com.my | 2
INTRODUCTION
Brief Background
. IHH was incorporated in Malaysia on 21 May 2010 under the name of IntegratedHealthcare Holding SB. It was then converted into a public company on 2 April 2012 and changed thename to IHH Healthcare Berhad involving in healthcare services (HCS), consultation, education andinvestment in healthcare service sector. It is one of the largest players in Asia via Parkway PantaiLimited (PPL) and IMU Health plus holding a 60% stake in Acibadem, one of the largest healthcareservice providers in Turkey. IHH has also interests in Apollo (11.2%) the largest healthcare serviceprovider in India and PLife REIT (35.8%)
which is one of the Asia’s largest healthcare real estate
investment trusts. IHH hospitals operate under the brand names of Mount Elizabeth, Pantai, Gleneaglesand Acibadem that are well known within the respective countries.
IHH Group Structure 
*Unless indicated otherwise, all entities are wholly-owned.
Source: Prospectus
 
Main Components of IHH 
Parkway PantaiLimited (PPL)
PPL is one of Asia’s largest private healthcare providers with a network of 16
hospitals with more than 3,000 beds, over 60 medical centres and clinics, andancillary healthcare businesses. PPL owns and operates Mount Elizabeth,Gleneagles a
nd Parkway East hospitals in Singapore, nine “Pantai” Hospitals andtwo “Gleneagles” Hospitals in Malaysia and has operations in India, the PRC, Hong
Kong, Brunei and Vietnam.
 Acibadem Holdings
Acibadem
is Turkey’s leading integrated private healthcare provider of high quality
diagnostic and treatment services. It runs a network of 15 hospitals (14 in Turkey, 1in Macedonia), 10 outpatient clinics and a number of ancillary healthcarebusinesses providing clinical lab services, ambulance transport, health sectorcatering and cleaning and hospital design and planning.
IMU Health (IMU)
 
IMU owns and operates International Medical University, Malaysia’s first private
healthcare university, offering a total of 17 academic programmes, includingmedical, dental, pharmacy, nursing, health sciences and complementary medicineprogrammes. As at 29 February 2012, IMU has 36 international partner universities,which is the largest network of partner universities in the region. IMU has trainedabout 7,000 students since it was founded in 1992 and had an enrolment of 2,963students as at 31 December 2011. IMU also owns Pantai College which trains nursesand allied health professionals for PPL hospitals.
Source: Prospectus
 
 
 
24 July 2012 IPO Note: IHH Holdings
 
www.bimbsec.com.my | 3
A leading healthcare provider
. IHH had progressively developed their businesses through both organicgrowth and acquisition with the objective to be one of the largest listed private healthcare providers inthe world. In meeting its objective, the Group had streamlined its operations, enhanced its branding,achieved greater synergies and cost savings. Going forward IHH has plans to provide more healthcarecentres to serve Central Eastern Europe, Middle East and Africa as well as strengthening its existingpresence. Currently, IHH has a strong workforce of more than 24,000 servicing its healthcare network of over 4,900 beds spanning across countries like Singapore, Malaysia, Turkey, China (PRC), Vietnam, HongKong, Brunei and Macedonia.
Utilisation of Proceeds 
Details of utilisation Estimated timeframe forutilisation upon listingRMm Percentage
Repayment of bank borrowings Within 12 months 4,662.76 90.9%Working Capital and General CorporateWithin 12 months 279.64 5.5%Estimated Listing Expenses Within 12 months 187.60 3.7%
Total 5,130.00 100.0%
Source: Prospectus
 
Allocation of IPO shares 
Categories Enlarged ShareCapital (million)Percentage of enlarged sharecapitalInstitution Placement
MITI Tranche 360.00 4.47%Global Institute Tranche 138.01 1.71%
498.01 6.18%Malaysia Public Offering
Malaysia PublicBumiputera 80.57 1.00%Non-Bumiputera 80.57 1.00%Eligible Directors of the group 4.50 0.06%Eligible employees of the group 22.59 0.28%Business associates and persons who have contributed to thesuccess of the group20.27 0.25%
208.51 2.59%Singapore Offering
Singapore public 52.00 0.65%Singapore placement 36.00 0.45%Eligible Directors of the group 3.75 0.05%Eligible employees of the group 16.60 0.20%Business associates and persons who have contributed to thesuccess of the group32.28 0.40%
140.64 1.75%Cornerstone Offering 1,387.50 17.22%TOTAL 2,234.65 27.74%
Source: Prospectus
 

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