IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>KKR cannot improve the terms of its offer but left the door open by stating that a deal can be quickly closed if the Board is willing to reset expectations.</li>
<li>The transaction is stuck in an impasse as <a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> will not recommend KKR’s offer until it is improved, and KKR says it cannot improve terms.</li>
<li>The peers’ shares have been, on average, flat since the undisturbed date. The shares are trading slightly below the undisturbed price and are attractive on fundamentals.</li>
</ul>


KKR cannot improve the terms of its offer but left the door open by stating that a deal can be quickly closed if the Board is willing to reset expectations.
The transaction is stuck in an impasse as Ramsay Health Care (RHC AU) will not recommend KKR’s offer until it is improved, and KKR says it cannot improve terms.
The peers’ shares have been, on average, flat since the undisturbed date. The shares are trading slightly below the undisturbed price and are attractive on fundamentals.


Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> disclosed that the <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a> consortium withdrew its indicative proposal but remains committed to the alternative proposal, which the Board earlier rejected. </li>
<li>The alternative proposal, while inferior to the indicative proposal, is still attractive and better than the status quo of no deal. The Board will engage for an improved offer. </li>
<li>The value gap between the parties is not huge, and a deal is possible. The upside (20% to alternative proposal) vs downside (-9% to undisturbed price) is worth a punt. </li>
</ul>



Ramsay Health Care (RHC AU) disclosed that the KKR &amp; Co Inc (KKR US) consortium withdrew its indicative proposal but remains committed to the alternative proposal, which the Board earlier rejected. 
The alternative proposal, while inferior to the indicative proposal, is still attractive and better than the status quo of no deal. The Board will engage for an improved offer. 
The value gap between the parties is not huge, and a deal is possible. The upside (20% to alternative proposal) vs downside (-9% to undisturbed price) is worth a punt. 


Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Bumrungrad Hospital Pub Co / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a> reported strong Q2 2022 results, with revenue growth of 64% y/y, mainy driven by a 121% y/y increase in revenue from non-Thai patients.</li>
<li>Despite international patient volume is recovering, it is still lower than pre-COVID levels. Non-Thai patients contributed 66.2% of total revenue in Q2 2019, higher than 62.3% reported for Q2 2022.</li>
<li>Thailand targets 10 million foreign tourist arrivals this year, which should augur well for Bumrungrad.</li>
</ul>



Bumrungrad Hospital Pub Co (BH TB) reported strong Q2 2022 results, with revenue growth of 64% y/y, mainy driven by a 121% y/y increase in revenue from non-Thai patients.
Despite international patient volume is recovering, it is still lower than pre-COVID levels. Non-Thai patients contributed 66.2% of total revenue in Q2 2019, higher than 62.3% reported for Q2 2022.
Thailand targets 10 million foreign tourist arrivals this year, which should augur well for Bumrungrad.


Bumrungrad Hospital Pub Co (BH TB): Flying High on Return of Medical Tourism

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> notes that discussions with KKR are ongoing, but the indicative proposal is held up by due diligence access to <a href="https://www.smartkarma.com/entities/ramsay-generale-de-sante" target="_blank" data-smartkarma-citation="entities:21473:1" rel="noopener">Ramsay Generale de Sante (GDS FP)</a>.</li>
<li>KKR proposed an alternative proposal that the Board rejected as “<em>meaningfully inferior.</em>” KKR remains interested, and its shenanigans are likely a move to nudge down the price.</li>
<li>At the last close, the risk/reward profile is favourable as the downside due to a deal break (-3% estimated decline) is lower than the upside (+20%) to the indicative proposal.</li>
</ul>



Ramsay Health Care (RHC AU) notes that discussions with KKR are ongoing, but the indicative proposal is held up by due diligence access to Ramsay Generale de Sante (GDS FP).
KKR proposed an alternative proposal that the Board rejected as “meaningfully inferior.” KKR remains interested, and its shenanigans are likely a move to nudge down the price.
At the last close, the risk/reward profile is favourable as the downside due to a deal break (-3% estimated decline) is lower than the upside (+20%) to the indicative proposal.


Ramsay's Overdue Update on the KKR Proposal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a>'s gross spread to <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a>’s offer (less the interim dividend) of A$87.52 has widened touching an all-time high of 17.0% today.</li>
<li>Despite the longer-than-expected due diligence, rising rates and market volatility, the evidence suggests that KKR remains committed. The expectation is for a binding proposal by June end.</li>
<li>At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside (+17%) from a binding offer. </li>
</ul>



Ramsay Health Care (RHC AU)'s gross spread to KKR &amp; Co Inc (KKR US)’s offer (less the interim dividend) of A$87.52 has widened touching an all-time high of 17.0% today.
Despite the longer-than-expected due diligence, rising rates and market volatility, the evidence suggests that KKR remains committed. The expectation is for a binding proposal by June end.
At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside (+17%) from a binding offer. 


Thailand

Chularat Hospital PCL owns medical centers and hospitals. The Company operates a variety of centers specializing in treatments such as hand surgery, open heart surgery, and strokes as well as providing emergency services and patient care. Chularat Hospital serves the medial industry throughout Thailand.

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Chularat Hospital (CHG TB)

Ramsay’s Bait-And-Switch KKR Offer Heads for the Exit

The peers’ shares have been, on average, flat since the undisturbed date. The shares are below the undisturbed price and are attractive on...

Arun George

Ramsay and KKR’s Game of Cat and Mouse

The value gap between the parties is not huge, and a deal remains possible. The upside (20% to the alternative proposal) vs downside (-9% to...

Arun George

Bumrungrad Hospital Pub Co (BH TB): Flying High on Return of Medical Tourism

With 50% revenue exposure to international patients, Bumrungrad should be the key beneficiary of resumption of medical tourism in Thailand and...

Tina Banerjee

Ramsay's Overdue Update on the KKR Proposal

KKR is interested but is looking to nudge the price down. A potential binding offer's risk/reward profile is favourable due to the limited downside...

Arun George

Ramsay Health's Offer Spread Risk/Reward

At the last close, the risk/reward profile is favourable as the downside due to a deal break (-10% estimated decline) is lower than the upside...

Arun George

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