Hospital Acquisitions, and how do other listed healthcare centers compare?

1. Ramsay-Sime Darby sells off RSDH for RM 5.7b, and will recognize a gain of approximately RM 2b (approx 30 sen per share). For investors of $SIME / 4197 (SIME DARBY BERHAD) , take note of the incoming special one off gain on disposal (maybe around 2Q24, pending completion of the disposal).

2. This will help Sime Darby cope with their acquisition of UMW, providing ample cash to fund the purchase without getting overlevered. Today, UMW share price hits RM 4.9, which matched my GTD order at 4.89 haha. Market seems to have improved confidence on the takeover, and I get to realize my arbitrage earlier than expected. For details of the acquisition, you may read further here: https://cutt.ly/kwYRnQc5

3. The RSDH sale was valued using the EV/EBITDA method, at approx 20x. Just for info, that the audited PBIT of RSDH in FY23 was RM 114mil-- assuming standard 25% corp tax implies PAT of ~RM 86mil... so using the PE method puts it around ***PE 66x***... and that doesn't consider finance costs yet, which could pump it to nearly PE 70x. Even assuming the share of profit is the final PAT of the hospital, puts the PE at around PE 50x. A very good deal, in my opinion, and no wonder sime said it was too good to refuse.

4. How are the other hospital companies valued by the market?

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD)
-EV/EBITDA : 16.5x
-PE 27x

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
-EV/EBITDA : 13.6x
-PE 25.7x

$IHH / 5225 (IHH HEALTHCARE BERHAD)
- EV/EBITDA : 15.7x
- PE 24.4x
(*** It's important to note of the 1 off gains in IHH's numbers of around RM 1bil profit, I couldn't be bothered to work it out but the valuation definitely much higher than these numbers)

***

Could the hospital M&A scene start picking up?