Monday, September 18, 2006

IBA Health Limited

I have been investigating IBA Health Limited (ASX:IBA) and it might be worth a speculative buy.

IBA Health Limited is a provider of healthcare information systems and e-health services to public and private hospitals as well as community and primary care organisations. The company was established in 1982 and operates in Australia, New Zealand, UK, Singapore and Malaysia.

They are rapidly expanding and they have numerous growth prospects in Malaysia and China. They have a good solid recurring revenue of 15 million and this is expected to rise to 20 million this year. This is good as it doesn't rely on new slaes to drive revenue.

They are reducing costs by moving overseas ( expects 4.5million savings per year but I would suggest this is too high a figure. It will be more likely 2-3 million savings a year ).

They have confirmed their guidance and there is a good interview in the announcements section on their web site.

The PE and PEG ratios are good and they have started to pay a dividend which shows they feel they are in a strong financial position.

Management is doing a good job with patnershipos with other companies and I would expect this to bring continued growth and sales in the future.

Estimtes for this company are for groth of aaround 12% which is not bad at all.

The only concern I have on the comapny is the operating cash flow. But I feel this should be sufficient in the near term and therefore it is a speculative buy.

Price target would be a 10%-20% discount to market which is proced approx 15 times earnings.
This puts a full value price of $1.03 So our buy price should be below 87c (15% discount).

Good Luck investing.

No comments: