It has written to Govt and is awaiting official response
PETALING JAYA: Sime Darby Bhd wants to acquire a stake in IJN Holdings Sdn Bhd which operates the national heart institute, Institut Jantung Negara (IJN).
Sime Darby had written to the Government about its intention and was now awaiting an official response, the company said in a statement to Bursa Malaysia.
The company did not provide details on the size of the stake and the price involved.
IJN surgeons at work. Having a bypass at a private hospital is likely to be several times the cost if you have it at IJN and the care and competency is likely to be the same or even better at IJN.
IJN is a leading heart medical centre in the region, offering comprehensive cardiac services under one roof and is 99.99% owned by the Ministry of Finance.
“I expect the Government (to) include strict conditions on medical charges in the negotiations,” said a healthcare analyst from OSK Research. “Probably Sime Darby has to divide its healthcare division into two segments, one for the public and another for the private sector. But the main question is, who will subsidise IJN’s expenses?”
The analyst said he expected the discussions to take a long time due to political considerations, adding that it was important for Sime Darby to find a win-win situation for both its shareholders and the public.
He added that although the acquisition would not have a significant impact on Sime Darby’s revenue, the move was logical as the group had planned to expand its healthcare division.
When Sime Darby Healthcare (SDH) was launched in October, the company had said it would focus on specialised treatment, expand its healthcare presence in Malaysia and also look for opportunities in emerging countries.
The analyst also expected Sime Darby to pay a premium price above the typical hospital valuation of 16 times price to earnings (PE) ratio, as IJN is a reputable heart specialist centre in the region.Some of IJN’s well-known patients include former Prime Minister Tun Dr Mahathir Mohomad, Prime Minister Datuk Seri Abdullah Ahmad Badawi and members of the royalty.
Kenanga Investment Bank’s head of research Yeonzon Yeow agreed that the acquisition of IJN “makes sense” but cautioned that challenges would arise if the takeover exercise was not done properly.
“The implication is if Sime Darby buys at a very expensive price, it will impact the group’s earnings and share price. IJN is a profitable unit but the five-star heart specialist is not easy to manage as it requires high operating expenses,” he said.
Kumpulan Sentiasa Cemerlang Sdn Bhd head of research Choong Khuat Hock said Sime Darby should clearly inform investors on the synergies to be derived from the acquisition of IJN.
SDH has alreaday taken over Subang Jaya Medical Centre (SJMC), which is now called Sime Darby Medical Centre Subang Jaya, while SJMC Academy of Nursing and Health Sciences is now Sime Darby Nursing & Health Sciences College.
It also runs Megah Medical Specialists Group, now known as Sime Darby Specialist Centre Megah.
In the financial year ending June 30, SDH contributed about RM250mil in revenue and RM20mil in net profit to Sime Darby’s group revenue of RM34bil and group net profit of RM3.5bil.
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