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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> notes that discussions with KKR are ongoing, but the indicative proposal is held up by due diligence access to <a href="https://www.smartkarma.com/entities/ramsay-generale-de-sante" target="_blank" data-smartkarma-citation="entities:21473:1" rel="noopener">Ramsay Generale de Sante (GDS FP)</a>.</li>
<li>KKR proposed an alternative proposal that the Board rejected as “<em>meaningfully inferior.</em>” KKR remains interested, and its shenanigans are likely a move to nudge down the price.</li>
<li>At the last close, the risk/reward profile is favourable as the downside due to a deal break (-3% estimated decline) is lower than the upside (+20%) to the indicative proposal.</li>
</ul>



Ramsay Health Care (RHC AU) notes that discussions with KKR are ongoing, but the indicative proposal is held up by due diligence access to Ramsay Generale de Sante (GDS FP).
KKR proposed an alternative proposal that the Board rejected as “meaningfully inferior.” KKR remains interested, and its shenanigans are likely a move to nudge down the price.
At the last close, the risk/reward profile is favourable as the downside due to a deal break (-3% estimated decline) is lower than the upside (+20%) to the indicative proposal.


Ramsay's Overdue Update on the KKR Proposal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a>'s gross spread to <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a>’s offer (less the interim dividend) of A$87.52 has widened touching an all-time high of 17.0% today.</li>
<li>Despite the longer-than-expected due diligence, rising rates and market volatility, the evidence suggests that KKR remains committed. The expectation is for a binding proposal by June end.</li>
<li>At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside (+17%) from a binding offer. </li>
</ul>



Ramsay Health Care (RHC AU)'s gross spread to KKR &amp; Co Inc (KKR US)’s offer (less the interim dividend) of A$87.52 has widened touching an all-time high of 17.0% today.
Despite the longer-than-expected due diligence, rising rates and market volatility, the evidence suggests that KKR remains committed. The expectation is for a binding proposal by June end.
At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside (+17%) from a binding offer. 


<ul>
<li>The KKR consortium will offer A$88.00 per share less any dividends paid after the date of the indicative proposal. The offer less interim dividend of A$0.485 is A$87.52 per share.</li>
<li>The <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> Board has provided due diligence access. We think the offer is attractive and represents an all-time share price high. </li>
<li>The largest shareholder is said to be supportive. The gross spread of the offer less the interim dividend of A$87.52 to the last close price of A$80.00 is 9.4%. </li>
</ul>


The KKR consortium will offer A$88.00 per share less any dividends paid after the date of the indicative proposal. The offer less interim dividend of A$0.485 is A$87.52 per share.
The Ramsay Health Care (RHC AU) Board has provided due diligence access. We think the offer is attractive and represents an all-time share price high. 
The largest shareholder is said to be supportive. The gross spread of the offer less the interim dividend of A$87.52 to the last close price of A$80.00 is 9.4%. 


Ramsay’s Indicative Bid from the KKR Consortium

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rajthanee-hospital" target="_blank" data-smartkarma-citation="entities:23729:1" rel="noopener">Rajthanee Hospital (RJH TB)</a> reported triple-digit revenue and net profit growth in Q3, with gross margin reaching all-time high to 57.4%, due to Covid-19-related tailwind.</li>
<li>With the steadily declining new Covid-19 cases in Thailand, Rajthanee’s Q4 revenue is expected to decline sequentially. However, non-Covid business should continue to recover with the resumption of elective procedures.</li>
<li>Despite the shares trading at a reasonable P/E of 17x, I see limited upside due to its small and geographically concentrated operations, with substantial revenue exposure to social security schemes.</li>
</ul>



Rajthanee Hospital (RJH TB) reported triple-digit revenue and net profit growth in Q3, with gross margin reaching all-time high to 57.4%, due to Covid-19-related tailwind.
With the steadily declining new Covid-19 cases in Thailand, Rajthanee’s Q4 revenue is expected to decline sequentially. However, non-Covid business should continue to recover with the resumption of elective procedures.
Despite the shares trading at a reasonable P/E of 17x, I see limited upside due to its small and geographically concentrated operations, with substantial revenue exposure to social security schemes.


Rajthanee Hospital (RJH TB): Q4 Revenue Growth to Decelerate Sequentially as Covid Tailwind Fades

<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

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)

Ramsay's Overdue Update on the KKR Proposal

KKR is interested but is looking to nudge the price down. A potential binding offer's risk/reward profile is favourable due to the limited downside...

Arun George

Ramsay Health's Offer Spread Risk/Reward

At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside...

Arun George

Ramsay’s Indicative Bid from the KKR Consortium

The KKR consortium will offer A$88.00 less an interim dividend of A$0.485 for a total of A$87.52 per share. The offer is attractive. The gross...

Arun George

Rajthanee Hospital (RJH TB): Q4 Revenue Growth to Decelerate Sequentially as Covid Tailwind Fades

Q4 revenue is expected to slow down q/q as new Covid-19 cases in Thailand is declining steadily. However, non-covid business is recovering. The...

Tina Banerjee

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

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