Monday, 3 March 2014

IHH Healthcare falls as investors lock in gains

KUALA LUMPUR: Shares of hospital operator IHH Healthcare Bhd fell to a low of RM3.73 on Monday as investors took profit despite reporting an improved fourth quarter net profit.

At 11.52am, IHH was down 10 sen to RM3.74 with 1.99 million shares traded.

The fall in the share price was also due to the weaker broader market, sparked by rising tensions in Ukraine and weaker Chinese economic data.

The FBM KLCI fell 13.60 points to 1,821.95. Turnover was 999.54 million shares valued at RM733.99mil. There were 177 gainers, 555 losers and 232 counters unchanged.

The biggest healthcare operator in Asia last week reported its fourth quarter net profit rose on-year by 47.03% to RM230.1mil while revenue rose 16.33% to RM1.78bil.

IHH is trading at a price-to-earnings of 48 times while it was trading at a forward 2014 valuation of 38 times, Bloomberg data showed.

Dealers said funds were taking the opportunity to sell into strength on the stock's historically high valuations which were at a huge premium compared with the benchmark FTSE Bursa Malaysia KL Composite Index's 17.2 times.

Public Invest Research, in its research note, said for FY13, revenue was within expectations at RM6.8bil (-3% on-year), accounting for 97% and 98% of its and consensus forecast respectively.

Net profit in FY13 fell 16% on-year to RM631mil (FY12: RM751mil), mainly due to higher staff costs, operating expenses and forex losses.

"Nonetheless, excluding exceptional items such as valuation gains and forex losses, FY13 net profit of RM649mil exceeded our expectations at 107% of full year forecast, albeit within consensus," it said.

However, Public Invest Research said it had an Underperform rating on IHH Healthcare and target price of RM3.52.

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