IHH reaches operational breakeven for Mount Elizabeth Novena Hospital

Big objective met, says analyst.

According to CIMB, its recent walkabout in IHH’s Mount Elizabeth Novena Hospital in Singapore suggested that this state-of-the-art hospital has reached operational breakeven, though the numbers will likely show up only in 2Q13 results. Its conclusion is based on conversations with various staff on the ground, ward activities and car-park volume.

Here's more:

We previously mentioned two catalysts for the stock. The first was a winning bid in Hong Kong, which has come to pass. Following the announcement, the stock had reached our previous target price.

We believe the second, which is EBITDA breakeven for Mount Elizabeth Novena, will catalyse the stock further.

Asset-recycling opportunities in relation to its Malaysian assets may also emerge in due course, with the channelling of freed-up capital to its new growth frontier in Hong Kong.We lift our SOP target price as we shift our valuation to CY14, in recognition of its milestones reached over the nine months since its listing.

Investors can now focus on its next growth propellers. An expected ramp-up of its Novena hospital and revenue intensity in all its three markets should continue to spur IHH’s growth.

We like IHH’s excellent branding stemming from its record of high-quality services, extensive suite of premier medical solutions and proven management which had delivered superior performances against peers in the past.