Brokers' take

IHH Healthcare | Buy Target price: RM6.35 (S$2.09) Nov 28 close: S$1.71 DBS Group Research, Nov 28

Headline net profit fell 86 per cent for the first nine months of 2018, year-on-year (y-o-y), to RM118 million, largely impacted by higher exchange translation losses following the sharp depreciation of the Turkish lira especially in Q3 2018 and the absence of a one-off RM555 million gain from the disposal of its stake in Apollo Hospitals which was recognised in 1H 2017. This is partially offset by foreign exchange gains (approximately RM23 million) arising from the strengthening US dollar on the group's US dollar-denominated cash balances in the first nine months of 2018. Going forward, given that IHH can now raise its stake in Acibadem to 90 per cent following the exercise of options by founder Charimand and his wife, management can soon proceed to capitalise the existing US$250 million equivalent of subordinated loans. Management expects to complete this by year-end, and reducing risk of Turkish lira translation losses. IHH has also obtained control (31.1 per cent stake) in Fortis Healthcare in Nov 18. Subsequently, it has made an open offer to acquire up to 26 per cent stakes in Fortis Healthcare and Fortis Malar. Management expects to complete the acquisition (including the offer to acquire all assets under RHT) by year-end.

Finally, Gleneagles Chengdu's opening is delayed to 2H 2019, with Gleneagles Shanghai to open in 2H 2020. Management expects to see increased pre-operating costs typically three months before opening when the hiring of doctors, nurses and staff occurs.