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Listing Of Integrated Healthcare To Stimulate Revaluation Of Industry
Malaysia Perspective | 23 February 2012
By:

By Cecelia Kong

Brokerage firms are hopeful that, as the investment arm of Malaysia, Khazanah’s decision to list Integrated Healthcare Holdings (IHH) will not only trigger a wave of consolidation within the healthcare industry, but more directly stimulate the revaluation of listed healthcare companies in and around Malaysia.
 
According to media reports, IHH recently announced a major push into Turkey by making a generous offer for a 75 percent stake in the local hospital group Acibadem Saglik Yatirimlari Holdings (ASYH).
 
It is understood that after the completion of the acquisition plan, Khazanah intends to list IHH in Singapore and Malaysia concurrently in the second half of this year to raise about RM9.135 billion (US$3 billion).
 
Brokerage firm OSK Investment Research reported that IHH’s listing at a time of rapid growth in the healthcare industry will indirectly encourage the development of the industry both domestically and regionally.
 
OSK Investment Research believes that given IHH’s generous offer for ASYH, IHH will be listed at a higher valuation in order to help Khazanah and its shareholders realise the value of their investments.
 
OSK Investment Research’s report mentioned that “Although IHH’s shares valuation will probably be on the high side, we believe it will still be well subscribed when it goes public,” reason being IHH’s ability to profit from its involvement with the private healthcare industry in emerging markets, which has unlimited growth potentials.
 
OSK Investment Research pointed out that there are reasons to believe that the listing of IHH will cause an upward revision of the valuation of listed healthcare providers, thereby bringing about a brighter prospect and development of the industry as a whole.
 
Based on this reason, OSK Investment Research is maintaining its original ‘Overweight’ rating of the healthcare industry, of which KPJ Healthcare is still regarded by OSK Investment Research as the most promising counter to buy into.
 
Its report stated that “At the moment, we are maintaining our original target price of RM5.21 for KPJ. Once IHH is listed, we are likely to raise our valuation of KPJ.”
 
Sources indicated that after its recent acquisition of 60 percent of ASYH’s shares, IHH bought over another 15 percent of ASYH’s shares from both Abraaj Capital, which has investment interests in the Middle East, Turkey, Asia and Africa, and the family of Mehmet Ali Aydinlar.
 
IHH eventually bought over 75 percent of ASYH’s stake for a total purchase price of RM3.66 billion, with hopes to become the world’s largest health care provider.
 
In addition, ASYH holds a 92 percent stake in Turkey’s leading healthcare provider, Acibadem Saglik Hizmetlerive Ticaret AS.
 
Earlier on, media reported that Khazanah has appointed several investment banks to handle the initial public offering matters of IHH.



* Including the number of hospitals owned and managed.
** Forecasted data, including the Apollo Hospitals Group.
Source: OSK Investment Research


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