Healthscope Trading At Low Levels With Growing Investor-Driven Pressure

  • Nov 02, 2018 AEDT
  • Team Kalkine
Healthscope Trading At Low Levels With Growing Investor-Driven Pressure

Healthscope Limited (ASX:HSO) is facing tough pressure from its investors. Joining the list of Healthscope shareholders, DNR capital has also raised questions to the chairman Paula Dwyer, regarding the disclosure of the company's books to a private equity firm led by Ben Gray’s BGH capital.

The second largest private hospital operator of the nation has received a renewed offer of $2.36 cash per share from BGH last week that has estimated the company valuation to $4.1 billion ever since the firm knocked its first offer in May.

The investors have decided to go on strike against the remuneration report and while addressing the annual general meeting the chairman mentioned that the decision to grant due diligence remains on priority. Despite of massive support to the strike action from the institutional investors joining the 9.3% shareholders of Ellerston capital the board can resist the pressure to finally grant the due diligence.  

HSO in its annual general meeting addressing its shareholders didn’t convince many of them. In its annual general meet, HSO reported 4.4% slip to $375.9 million in terms of group operating EBITDA. Decline in the statutory net profit after tax from continuing operations up to $75.8 million was reported which was the result of significant one –off expenses of $75.4 million after tax primarily associated with hospital closures and the recognition of lease provision in the Victorian hospital portfolio.

While addressing the shareholders, major concerns faced by the private hospital operators was not at all alleviated and this threw a proper light on such issues which can impact the growth plan of the company along with the complete domain. HSO performance and success along with future projects was discussed without taking into consideration the current condition prevailing across private hospital operators and such issues have raised concern among the shareholders.

However, management seems very confident about the growth plan which includes plan to sell 20 hospitals and lease them back to provide value to the shareholders. The estimated value from these properties is approximately between $1.6 billion -$1.8 billion, well above the book value of the company at $1.1 billion.

However, the valuation doesn’t convince all. Implied multiple looked on higher side. The stake has been increased by the bidding group indicating the seriousness of their intention.

Shareholders are still struggling with the proper justification from the company on the property plan. Shareholders are not convinced with the higher risk adjusted valuation of the real estate. With lot of contingencies attached to the real estate it is difficult to achieve such kind of value lift to equity holders.

More than half of the registered shareholders demand the board to grant due diligence to the private consortium. Shareholders have raised questions and asked the company to allow the private equity to its data room but so far, no constructive action has been taken in this direction by the company which signals lack of confidence the company has on it growth plan.

With the company not proceeding as per the proposed property spin –off plan the bid appears highly conditional to the shareholders and the scrip after making a day high of $2.105 trades at the current levels of $2.07.


Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.

 

All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.

 

There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK