Analysts positive on IHH Khazanah’s Prince Court purchase

PETALING JAYA: Analysts are positive on IHH Healthcare Bhd’s involvement in the takeover of Prince Court Medical Centre (PCMC) by Khazanah Nasional Bhd, maintaining a positive outlook on the hospital operator’s earnings.

On Friday, Khazanah announced that through a wholly-owned subsidiary, Pulau Memutik Ventures Sdn Bhd, it will acquire the hospital from Petroliam Nasional Bhd (Petronas) for an undisclosed sum by the end of June.

The deal includes a collaboration agreement with IHH for shared services support and operational improvement initiatives at PCMC.

IHH will be given a right of first offer to acquire PCMC during a pre-agreed period, which was also not disclosed. In January, IHH had denied being in “any process to acquire PCMC”.

MIDF Research said taking into account the location of the 270-bed PCMC and the type of specialisation available, the acquisition is expected to cost Khazanah RM300 million to RM400 million.

Citing the lack of a clear-cut timeline for the first right offer, MIDF said the collaborative arrangement, which centres on providing advisory services for a fee, is attractive for IHH in the long term.

MIDF considers the possible acquisition of PCMC by IHH a move which would be in line with the hospital operator’s strategy to be the leading premium healthcare service provider in Malaysia.

It has no other greenfield or brownfield plans to expand in Malaysia, other than the extensions of several existing hospitals.

“Furthermore, with IHH’s experience of managing and transforming hospitals into premium healthcare service providers, we opine that this potential acquisition could be earnings-accretive for IHH in the future,” MIDF said.

MIDF maintained a buy call on IHH with an unchanged target price of RM6.91.

Public Investment Bank Research opined that PCMC would be an attractive asset to be added into IHH’s portfolio, maintaining a neutral call at an unchanged target price of RM5.79 for IHH’s shares.