7-11 sold 75% stake in Caring Pharmacy Group to BIG Pharmacy Healthcare for RM637.5m last Friday.
Conclusion:
a) the deal is a bit rich ... net net good for 7-11.
b) seriously, its so much more expensive that Apex Healthcare, which should be in everyone's core portfolio, as Apex Healthcare still has a very juicy subsidiary within the company (orthopedics/prosthetics), Apex Healthcare is an interesting stock to follow.
c) while its good for 7-11, other than paying down debt I see no cohesive deployment of capital for future earnings growth platform, so call on 7-11.
d) the partial sale by Straits Apex looks right a necessary step rather than a fantastic corporate decision. On its own, SA probably cannot list owing to its high potential contribution to Apex Healthcare. The only way forward is to sell down the stake so that the listing will come via another entity. You cannot get exposure to SA directly, so Apex Healthcare is the only option.
Apex Healthcare's QTRs
Disclaimer: this is not a call to buy or sell, just an opinion from a market watcher, please consult your dealer or remisier before any action.
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