Sep 5 2012, 01:25 AM
QUOTE(SKY 1809 @ Sep 4 2012, 08:10 PM)
kinda true.
What is yr judgment on rm 6B Goodwill and 500m currency risk of IHH , mind to share
Ok! Took a little bit of reading....actually, can only say "browsing through", since I'm too lazy to read such big paper. It's REALLY THICK!!! What is yr judgment on rm 6B Goodwill and 500m currency risk of IHH , mind to share
Regarding the Goodwill and the currency risk. For me, I will go straight to see what the experts have to say simply because I do not have the ability to deal with those numbers and what are the better way to solve them. From an article, it seems both CIMB and HLBank researchers have not much concern on this issue. We also saw IOICorp reported huge loss on currency risk for the past few quarters, and so did some large international corporations. I don't think that would hurt too deep on them since their scale are much larger than that. Besides, IHH's net gearing is quite low actually, just 5%(FY12) and 2%(FY13). I don't see much problem to just do a re-finance to cut down the loss.
Reputation(or branding) is one very important key point in my mind regarding the "consistency" of ability in its management team. If the performance is not consistent, be it profit up 1000% (PE 0.1x) also can become meaningless if the next day they report a net loss out of nowhere. Good brand deserve much higher valuation because of this. Take a look at Nestle. 20x that time people said expensive, now 30x, still got people buying. CAGR only 8%, not 100%. People has confidence on their management, that's why they willing to pay on higher valuation. Now IHH is a great brand with good track record, and it is a large scale company. Big means something. Big means more powerful on negotiations etc. And if the management was not great, it's very hard to become this big. There must be a reason for a company to be able to grow this big.
However, I am still concern on its very rich valuation. At 17x EV/EBITDA (vs peers 13x) which projected a 3-yr earnings CAGR of 62%, that's very optimistic as world economy uncertainty still remains. Besides that I agree on most of the bright side in the paper regarding hospital business future(ie. aging population, raising medical demands in emerging markets etc.), I will not buy unless it falls to a more comfortable price for me. And, there is no dividend plans yet, although the management did mention they are not ruling out to pay certain dividend. Holding a stock long term without any dividend is kind of painful for me.
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