IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p>On 6 May 2021, Bloomberg reported that <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a>, the largest shareholder with a 32.90% stake, is currently exploring a proposal to privatise <a href="https://www.smartkarma.com/entities/ihh-healthcare-bhd" target="_blank" data-smartkarma-citation="entities:876:1" rel="noopener">IHH Healthcare (IHH MK)</a>. Mitsui is aiming to partner with private equity firms and has reached out to Khazanah Nasional Berhad, the second-largest shareholder with a 26.02% stake, to acquire its stake, according to Bloomberg. Mitsui and IHH have not formally commented on the report. On the back of the report, the shares have risen 8.8% from the unaffected price of RM5.20 (5 May) to the last close price of RM5.66. </p><p>IHH is listed on the Main Markets of Bursa Malaysia and the Singapore Stock Exchange. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. Mitsui sits just below the threshold and the acquisition of further shares from Khazanah Nasional Berhad would trigger an MGO. </p><div class="content-highlight"><p>We think that report has some credibility due to Mitsui’s view that IHH is a core asset to fulfil its ambition of expanding in the largest healthcare ecosystem in Asia. Also, Mitsui has a previous working relationship with Khazanah Nasional Berhad and announced the acquisition of a 16% stake in IHH from Khazanah Nasional Berhad in November 2018. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal). </p></div>

On 6 May 2021, Bloomberg reported that Mitsui &amp; Co Ltd (8031 JP), the largest shareholder with a 32.90% stake, is currently exploring a proposal to privatise IHH Healthcare (IHH MK). Mitsui is aiming to partner with private equity firms and has reached out to Khazanah Nasional Berhad, the second-largest shareholder with a 26.02% stake, to acquire its stake, according to Bloomberg. Mitsui and IHH have not formally commented on the report. On the back of the report, the shares have risen 8.8% from the unaffected price of RM5.20 (5 May) to the last close price of RM5.66. IHH is listed on the Main Markets of Bursa Malaysia and the Singapore Stock Exchange. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. Mitsui sits just below the threshold and the acquisition of further shares from Khazanah Nasional Berhad would trigger an MGO. We think that report has some credibility due to Mitsui’s view that IHH is a core asset to fulfil its ambition of expanding in the largest healthcare ecosystem in Asia. Also, Mitsui has a previous working relationship with Khazanah Nasional Berhad and announced the acquisition of a 16% stake in IHH from Khazanah Nasional Berhad in November 2018. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal). 

IHH Healthcare’s Possible Privatisation by Mitsui

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

<p><strong>We maintain BUY rating with 2021E target price of Bt2.90, derived from a discounted cash flow valuation (WACC = 5.0% and terminal growth = 2.0%). We attended analyst conference on Friday and came up with key information as followed;</strong></p><div>• CHG reported 2020 net profit at Bt877m (+24%YoY). While, the Covid-19 affected patient traffic, which resulted in IPD revenue decrease, its Social Security revenue and Covid related services helped boosting overall performance.</div><div></div><div>• In 2021E CHG targeted to grow its revenue by double digit. The growth should come from i) the patients recovery from low base in 2020, ii) the full year breakeven for CHG304 and RPC hospitals, iii) an additional income from Social Security quota opening for CHG304, and iv) the  revenue from management fee for public hospital management contracts.</div><div></div><div>• There were two new projects in pipeline to be commenced in 2022.</div>

We maintain BUY rating with 2021E target price of Bt2.90, derived from a discounted cash flow valuation (WACC = 5.0% and terminal growth = 2.0%). We attended analyst conference on Friday and came up with key information as followed;• CHG reported 2020 net profit at Bt877m (+24%YoY). While, the Covid-19 affected patient traffic, which resulted in IPD revenue decrease, its Social Security revenue and Covid related services helped boosting overall performance.• In 2021E CHG targeted to grow its revenue by double digit. The growth should come from i) the patients recovery from low base in 2020, ii) the full year breakeven for CHG304 and RPC hospitals, iii) an additional income from Social Security quota opening for CHG304, and iv) the  revenue from management fee for public hospital management contracts.• There were two new projects in pipeline to be commenced in 2022.

CHG: Set for Double Digit Growth in 2021E

<p><strong>We upgrade our recommendation to BUY rating, from HOLD, with new 2021E target price of Bt2.90, from Bt2.65, derived from a discounted cash flow valuation (WACC = 5.0% and terminal growth = 2.0%). We attended analyst meeting yesterday and came up with key information as followed;</strong></p><div>• CHG recurring profit in 3Q20 was Bt282m (+5%YoY, +82%QoQ). The solid performance was supported by an increase in social welfare programs revenue, which included the upward adjustment of payment in RW&gt;2 cases.</div><div></div><div>• We expected 4Q20E earnings to grow YoY, thank to patient traffic recovery, additional Covid-19 testing revenue, better profitability, and, a breakeven of new hospitals.</div><div></div><div>• In 2021E, the earnings growth should come from i) the recovery from low base in 2020, ii) the full year breakeven for  CHG304 and RPC hospitals, and iii) an additional income from Social Security quota opening of 50,000 registered member for CHG304.</div>

We upgrade our recommendation to BUY rating, from HOLD, with new 2021E target price of Bt2.90, from Bt2.65, derived from a discounted cash flow valuation (WACC = 5.0% and terminal growth = 2.0%). We attended analyst meeting yesterday and came up with key information as followed;• CHG recurring profit in 3Q20 was Bt282m (+5%YoY, +82%QoQ). The solid performance was supported by an increase in social welfare programs revenue, which included the upward adjustment of payment in RW&gt;2 cases.• We expected 4Q20E earnings to grow YoY, thank to patient traffic recovery, additional Covid-19 testing revenue, better profitability, and, a breakeven of new hospitals.• In 2021E, the earnings growth should come from i) the recovery from low base in 2020, ii) the full year breakeven for  CHG304 and RPC hospitals, and iii) an additional income from Social Security quota opening of 50,000 registered member for CHG304.

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Mitra Keluarga Karyasehat / Equity Bottom-Up

<p>The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. </p>
<p>Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.</p>

The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. 
Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

Bangkok Chain Hospital / Equity Bottom-Up

<p><strong>Yesterday analyst meeting came out with a neutral tone. We expect 2Q20 earnings to be the bottom quarter, given full quarter impact from COVID-19 quarantine as government order and higher fix cost from new hospital opened in May 2020.</strong></p>
<p><strong>Key takeaway:</strong></p>
<ul>
<li>2Q20 will factor in all negative impact including full COVID-19 impact, low seasonality, incurring fixed cost from opening in May.</li>
<li>Cutting earnings forecast by 16% and 14% in 2020-21E.</li>
<li>We maintain our positive view toward its 2020-21E earnings outlook on the backs of two hospitals expansion, higher SSO revenue due to 7.25% rise in reimbursement rate and demand recovery for IVF Lab after pandemic.</li>
</ul>
<p><strong>We maintain our BUY rating with 7% cut in our target price to Bt16.2 based on 33xPE’21E, which is close to 10-years average of health care sector.</strong></p>

Yesterday analyst meeting came out with a neutral tone. We expect 2Q20 earnings to be the bottom quarter, given full quarter impact from COVID-19 quarantine as government order and higher fix cost from new hospital opened in May 2020.
Key takeaway:

2Q20 will factor in all negative impact including full COVID-19 impact, low seasonality, incurring fixed cost from opening in May.
Cutting earnings forecast by 16% and 14% in 2020-21E.
We maintain our positive view toward its 2020-21E earnings outlook on the backs of two hospitals expansion, higher SSO revenue due to 7.25% rise in reimbursement rate and demand recovery for IVF Lab after pandemic.

We maintain our BUY rating with 7% cut in our target price to Bt16.2 based on 33xPE’21E, which is close to 10-years average of health care sector.

BCH: 2Q20 Earnings Should Be the Bottom Quarter

Thailand

Chularat Hospital Public Company Limited operates a private hospital business through numerous hospitals, medical facilities, and clinics primarily located in eastern Bangkok, Samut Prakan, and other eastern provinces of Thailand. They offer a range of medical services, including specialized care like heart centers and stroke centers. The company is headquartered in Samut Prakan, Thailand, and was founded in 1986.

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Chularat Hospital (CHG TB)

IHH Healthcare’s Possible Privatisation by Mitsui

Mitsui, the largest shareholder, is currently exploring a proposal to privatise IHH. Overall, at the last close price, the downside risk is low...

Arun George

CHG: Set for Double Digit Growth in 2021E

We maintain BUY rating with 2021E target price of Bt2.90, derived from a discounted cash flow valuation (WACC = 5.0% and terminal growth = 2.0%)....

Pi Securities PCL, Thailand

CHG: Back on Growth Track

We upgrade our recommendation to BUY rating, from HOLD, with new 2021E target price of Bt2.90, from Bt2.65, derived from a discounted cash flow...

Pi Securities PCL, Thailand

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

The finding of the COVID

Henry Soediarko

BCH: 2Q20 Earnings Should Be the Bottom Quarter

Yesterday analyst meeting came out with a neutral tone. We expect 2Q20 earnings to be the bottom quarter, given full quarter impact from COVID-19...

Pi Securities PCL, Thailand

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