facebook(Stocks Discussion) SGX: IHH Healthcare (SGX: Q0F)? - Seedly

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Anonymous

16 May 2019

Stocks

(Stocks Discussion) SGX: IHH Healthcare (SGX: Q0F)?

Discuss anything about IHH Healthcare SGX: Q0F share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell IHH Healthcare SGX: Q0F on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment in IHH Healthcare SGX: Q0F.

Discussion (1)

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Isaac Chan

16 May 2019

Business at NUS

TL;DR This is a mature business with a strong balance sheet. However, the company is not very profitable and has is not very efficient in their use of resources. With low growth rates, the shares also seem to be overvalued.

Source: Today Online

Business Profile

IHH Healthcare is a leading international provider of premium integrated healthcare services operating in the home markets of Malaysia, Singapore, Turkey and India. They are also growing in China and expanding their network in Asia and Central and Eastern Europe, the Middle East and North Africa.

Income Statement


For 2018, IHH does not seem very much profitable, with a net profit margin of only 4.3%. Moreover, the company's earnings have fallen over the last 3 years as well. The profitability margins seem to have fallen too. As a whole, their income statement seems to have a neutral strength which is weakening over time.

Balance Sheet

The company does seem to have a very strong balance sheet. This is derived from their very strong short-term liquidity as well as their low debt level. As you can tell, these ratios have also improved over time, as the company has paid off its debt over time.

Free Cashflow Analysis


For 2018 itself, the free cash flows as a per cent of sales seem relatively high, with a Free Cashflow as % of sales of almost 30%. However, free cash flow to equity is quite high. One bad sign is how free cash flow had decreased over the past few years as well. We can see that he is mainly caused by lower cash flow from operating activities over time. On the other hand, we can see that capital expenditures and change in net working capital have decreased, which increases cashflows. One very good silver lining is how free cash flow to equity has grown over time, which means that shareholders are achieving higher cash flows. However, the growth in free cash flow is quite low, due to the very low return on capital. The low growth rates can also be attributed to how mature the company is.

Efficiency Metrics

As a whole, the firm is quite inefficient, almost on all counts. The reason for the very low ROE is due to low Asset Turnover as well as the high book value of equity. Moreover, the net profit margin is also relatively low.

Valuation

Currently, the firm seems to be trading at a very high price. This is mainly caused by a very high market cap. However, they have quite a high FCFE yield due to the increase in FCFE over time. Maybe the market has not recognised such value yet. In any case, their valuation doesn't look good. ​​​

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