BIMB Securities maintains Sell on IHH, says valuations still high

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KUALA LUMPUR (Nov 26): BIMB Securities Research has maintained its Sell rating on IHH Healthcare Bhd at RM4.89 with an unchanged target price of RM3.28 and said IHH’s 9MFY14 normalised profit after tax and minority interest (PATMI) of RM541 million was within house expectations, making up 77% of its full year forecast.

In a note Wednesday, the research house said IHH’s 9M revenue grew by 9.6% driven by increase in patient volume and contribution from new hospitals during the quarter.

“Meanwhile, normalised PATMI grew much higher at 23.3% for the same period mainly due to lower finance and tax expenses.

“We maintain our FY14 and FY15 earnings forecast respectively and our fair value is unchanged at RM3.28.

“Nonetheless, the stock is currently trading at forward PER of 57x and 54x for FY14 and FY15 respectively, which is way beyond our fair value; hence, maintaining our Sell recommendation,” it said.