RHB Research initiated coverage of IHH Healthcare Bhd
with 'outperform' rating and fair value of 3.53 ringgit per share, citing strong earnings growth prospects for the world's second largest private healthcare service provider through 2014.
"While valuations are relatively expensive at 33.5 times 2013 price-to-earnings ratio, we believe there is still room for valuations to move higher given its strong earnings visibility and wider network of hospitals, which could result in significant savings from better economies of scale compared to its regional peers," the research house said in a note on Wednesday.
RHB forecast core net profit growth of 5.8 percent for IHH in 2012, 25.9 percent in 2013 and 26.0 percent in 2014.
"Singapore will be the main earnings driver for the company, driven by the gradual ramp-up of the new state-of-the-art Mount Novena hospital," it added.
The counter dropped 0.31 percent to 3.18 ringgit per share, underperforming the benchmark index's 0.07 percent rise.
0933 (0133 GMT) (Reporting by Yantoultra Ngui in Kuala Lumpur; email@example.com); Editing by Jijo Jacob
Keywords: MARKETS MALAYSIA STOCKSNEWS/IHH