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The acquisition comes at a convenient time for both parties as IHH will be able to gain a foothold in India, while Fortis will receive a quick cash injection. – Reuters photo
KUCHING: Analysts welcome the long-awaited decision of IHH Healthcare Bhd (IHH) for the proposed subscription of 235.3 million new shares Fortis Healthcare Ltd (Fortis) by way of award preferential representing 31.1% of the total The total amount of the subscription amounts to 4,000 crore ruppes or about RM2.35 billion – to 170 rupees per share or about RM 9.98 per share.
IHH is the largest shareholder of Fortis
Hwang Affin Investment Bank Bhd (AffinHwang Capital) said in a note that the acquisition comes at a convenient time for both parties as IHH will be able to gain a foothold in India, while Fortis fast injection of money.
"Fortis has two immediate objectives: First, it is estimated that one-third of the Rs .4 trillion financed (RM 765 million) is aimed at ensuring operational stability and meeting short-term liquidity needs by replenishing the fund. the rest of the funding will be used to privatize RHT Health Trust and SRL ", he added, adding that RHT is a Singapore-listed company with health assets in India while SRL is a diagnostic company with 368 laboratories in India
. an existing agreement between Fortis and RHT for the former to buy the remaining stake that it does not own in the latter. "
Meanwhile, MIDF Amanah Investment Bank Bhd (MIDF Research) estimated that the acquisition price was just valued.
" Based on the price of acquisition included between 2.3 and 4.3 billion RM for a stake of 31.1 to 57.1 percent – depending on the level of acceptance of the offer of Fortis – the cost of acquisition per bed "
" This is derived from the last number of beds in Fortis which is 5637 beds.
"Compared with the previous acquisition costs of IHH India's global hospitals at RM6767,000 per bed.We believe that the acquisition of Fortis is just appreciated since Fortis is the second most a major hospital player with a pan-Indian presence and a strong presence in all major hubs across India; has a network of 40 hospitals; has a presence in 5 different countries; and He specified that Kenanga Investment Bank Bhd (Kenanga Research) was neutral about this business development by the IHH
.He is positive as it propels IHH to become a leading pan-Indian hospital operator, operating more than 5,400 beds in 37 hospitals. "However, we are concerned about the problems at Fortis, including an FY18 audit report, risk of more provisions, failures in internal controls, which led to Regulatory surveys This could well mean a risk of execution, "he warned in his own report yesterday (19659006). target price of RM5.10 per IHH share. AffinHwang Capita has reaffirmed its purchase rating on IHH with a target price of RM7.10 per share as it believes it is on track for an organic earnings recovery driven by reduced losses on the horizon. 1919.
MIDF Research reiterated its recommendation on IHH with "In the future, we continue to believe that resilient demand and growth in health services across all of its domestic markets will continue to grow. Fuel the growth of its profits, combined with the increased contribution of its domestic markets. "We also expect further improvements in terms of contributions from GHK and Acibadem Altunizade, as both hospitals continue to increase their respective operations by accepting more complex cases that will offset the gradual depreciation, "he adds." amortization and financial expenses of these two hospitals. "
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