SYB symbion health limited

strong buy by mac

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    Mayne (MAY) has announced that they will undertake a share buyback worth up to $500m following the completed sale of 41 of its 53 hospitals. The $500m buyback is larger than the market was anticipating and should fuel further gains in the share price. In the short-term, Macquarie Research Equities (MRE) believe that MAY shares will re-rate towards their valuation of $3.95.

    The announced buyback is expected to be made up of an off-market component of $250-350m, with the remainder to be bought on-market. The off-market component will take place in March 2004 following the first-half result and approval by shareholders. Given that MAY has zero franking credits, the return of capital will be 100% capital.

    The buyback announcement timing and quantum delivers on the management’s promise that they will be more shareholder “friendly”, by returning capital to shareholders and pursuing core business acquisitions rather than using capital for empire building.

    MRE hold a short-term Outperform recommendation on MAY and a sum-of-parts valuation of $3.95.
 
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Currently unlisted public company.

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