KUALA LUMPUR – AmInvestment Bank Bhd has maintained its “hold” call on IHH Healthcare Bhd (IHH) with an unchanged fair value (FV) of RM6.29.
This was despite news over the weekend that Permodalan Nasional Bhd (PNB) is placing out some of its shares in IHH.
“We are neutral on the news pending a formal announcement on the placement,” it said in a research note today.
According to AmInvestment, local financial news portal The Edge Malaysia Weekly, citing a source familiar with the matter, reported that PNB is placing out some of its shares in IHH.
“Based on its annual report 2020, PNB (through its various funds and subsidiaries) owns around 5.5% stake in IHH.
The top three shareholders of IHH are Mitsui & Co Ltd (32.90%), Khazanah Nasional Bhd (25.81%) and the Employees Provident Fund (8.30%) as at March 31, 2021,” the research note said.
On IHH’s share performance, AmInvestment said the share price has done well this year with a year-to-date gain of 22% to RM6.72 from RM5.50, supported by its strong earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth in the first half of 2021 (H1 2021) which surged 107% to RM2.07 billion.
On the third quarter of 2021 (Q3 2021) outlook, the investment bank reiterated its view that earnings for the quarter should see a q-o-q decline due to the expectation of lower earnings from its laboratory business.
“Covid-19 daily new cases in India have eased to about 20,000 cases in September from a peak of about 400,000 cases in May.
“This should result in lower revenue for IHH laboratory (business) in Q3 2021 due to fewer Covid-19 tests,” it said.
Although the number of elective surgeries may increase in Q3 2021, it is expected that these would not be enough to offset the impact of the lower earnings from laboratory tests.
According to the investment bank, India has the highest number of labs at over 420, accounting for 87% of the total 483 labs of the company in four key markets.
IHH’s laboratory sector generated a revenue of RM975 million in H1 2021.
At 10.45am, IHH shares rose six sen to RM6.78 with 665,300 shares changing hands. – Bernama, October 18, 2021
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