IHH IPO Target Price Fair Value

IHH IPO Target Price Fair Value: Let is look at the IHH IPO target price fair value RM2.94 and RM2.98. Let us look at how the fair value is derived.

Public Investment Bank forecast, IHH fair value RM2.98
2012 net profit RM344 mil, EPS RM0.043 PE ratio 67x
2013 net profit RM490 mil, EPS RM0.061, PE ratio 47x

ECM Libra forcast, IHH target price RM2.94
2012 net profit RM374 mil, EPS RM0.046 PE ratio 61x
2013 net profit RM608 mil, EPS RM0.075, PE ratio 38x
2014 net profit RM804 mil, EPS RM0.100 PE ratio 29x


My prediction is net profit of RM700mil in year 2013. Both the above forecast net profit is much lower than my prediction. But let us wait for what other brokers will say.

By looking at the above forecast, you will notice that even in year 2014, the PE ratio is still about 30x. Expensive.


But I am wondering why valuation is so low but still can have fair value near the IHH IPO price. Let us see what they have commented.


ECM Libra.
Given the high predictability, stability and captive earnings streams in the healthcare services, we are using 2013 EV/EBITDA valuation methodology in our sum-of-parts valuation. Our target price is RM2.94 based on sum-of-parts valuation. This is just a 3% upside from the indicative IPO price of RM2.85, which could be revised lower depending on the book-building exercise. The retail and institutional IPO price will be the same.


Public Investment Bank
We derive a fair value of RM2.98 based on EV/EBITDA valuations pegged to FY13 earnings. We used a sum-of-parts approach, assigning individual growth rates and EV/EBITDA multiples to each country. We believe an SOP valuation is justified as we do not foresee major synergies to be achieved across the group, with the bulk of operational costs (i.e. staff and material costs, rental, service fees) being incurred in the respective countries. For example, the procurement of pharmaceutical drugs,
medical devices and consumable products are done separately by PPL and Acibadem, and the purchase of patented drugs is typically negotiated locally with the local suppliers of each country. Furthermore, there is no global brand for IHH; each country has its individual trademark brand (Parkway, Pantai, Gleneagles and Acibadem) which customers identify with, and these brands are unrelated to each other. As such, each segment is likely to perform as a separate entity, with IHH
reaping the benefits as a sum of all parts.

Do you think is worth to apply IHH IPO after seeing the low valuation? You may argue that this is Malaysia General Election stock and sure can make money. The reasons to apply IHH IPO and not to apply, can refer here, http://politemarket.blogspot.com/2012/07/ihh-ipo-why-you-should-not-apply.html


As usual, I will come out with IHH Target Listing Price before it is listed, for an introduction please refer here.
http://politemarket.blogspot.com/search/label/IPO%20Target%20Listing%20Price

I will post more on IHH IPO, please visit again.


More info on IHH, here.
http://politemarket.blogspot.com/search/label/IHH



More info on recent IPO, here.
http://politemarket.blogspot.com/search/label/IPO



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