IHH share price up despite auditor issue


  • Business
  • Thursday, 04 Apr 2019

Malaysia's IHH Healthcare Bhd has made a proposed offer for Fortis worth US$1.3 billion, while smaller local rival Manipal Health Enterprises Pvt Ltd, has made an offer of about $1.2 billion.

PETALING JAYA: IHH Healthcare Bhd’s share price rose 3.3% to RM5.60, from Tuesday’s close of RM5.37.

The group’s share price came under pressure following the issuance of a qualified opinion by its external auditor, KPMG PLT, regarding the Fortis Healthcare acquisition.

CGS-CIMB, in a research report, said it was not negatively surprised by the qualified opinion, as matters surrounding the independent audit report had previously been flagged over the course of the Fortis acquisition.

“We think the share price has overreacted to the announcement.

“While the company has already made impairments for some of the items, we do not rule out further adjustments to the provisional goodwill recognised by IHH on the Fortis acquisition, as more disclosures and claims are identified.

“We also think there could be the incurrence of higher professional fees during this financial year,” said CGS-CIMB.

The research house added that the Fortis board has taken several measures to address the basis for the qualified opinion, which include enforcing greater oversight and enhancing authority levels for payments or fund transfers within the Fortis Group.

Fortis has also initiated an enquiry of the management and forensic audit, which is expected to be completed before Dec 31, 2019.

In line with directions from the Securities and Exchange Board of India, Fortis has also sought to recover dues amounting to an estimated RM237mil from the former controlling shareholders of Fortis and other entities.

Likewise, the board of IHH has commissioned an independent audit on Fortis’ operations.

“We expect the share price weakness to linger in the near term from the Fortis integration and Acibadem debt restructuring, but continue to like IHH for its presence in new growth markets and stronger earnings growth in financial year 2020 post-restructuring,” said CGS-CIMB.

On another note, IHH has appointed Tomo Nagahiro as an alternate director.

According to a Bursa Malaysia filing, Nagahiro currently serves as general manager of the Healthcare Business First Department in the healthcare business division of Mitsui & Co Ltd, overseeing Mitsui’s investment in IHH.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

IHH Healthcare , share , price , auditor , issue , CGS CIMB ,

   

Next In Business News

Advocating for a sustainable tomorrow
Eye on sustainable exports
Steady progress along ESG journey
Private business and succession planning – why it is important
PNB to add infrastructure assets in portfolio
Shell to invest in second Malaysia O&G project
Local banks avoid global problems
Recommendations for Budget 2023
Developer’s campaign a resounding success
Investors take cautious stance on Bursa ahead of Budget 2023

Others Also Read