Monday, 31 August 2015

IHH Healthcare

UOBKayhian on 27 Aug 2015

FY15F PE (x): 47.6
FY16F PE (x): 38.2

2Q15 net profits were within our expectations, representing 23% of our full-year estimates. Inpatient admissions update. In Singapore, the 5.5% yoy inpatient increase was attributed mainly to local patients as well as medical travellers from non-traditional markets such as the Middle East. In Turkey, inpatient admissions declined by 1.1% yoy to 32,636 due to the start of the Ramadan period in mid-Jun 15 as compared with the start of Ramadan period at end-June in 2014. In Malaysia, hospitals saw a marginal 0.5% yoy decrease in inpatient admissions mainly due to a general slowdown in consumption following the implementation of GST in Apr 15. Upgrade to HOLD but maintain target price at S$1.77. We note that post a 15.6% decline in share price from its high in May 15, IHH is currently trading at 38.2x 2016F PE, slightly higher than the industry’s 31.5x but at a cheaper valuation based on its 2016F PEG ratio of 1.56x vs peers’ 2.2x.

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