Llelleythan Tan, an analyst from UOB Kay Hian, maintained the Buy rating on Raffles Medical Group (RAFLF – Research Report). The associated price target is S$1.47.
Llelleythan Tan Yi Rong has given Raffles Medical Group (RAFLF) a Buy rating due to several compelling reasons. Firstly, the company has announced its expansion into Vietnam through a majority stake acquisition in a hospital. This move is seen as a strategic regional expansion, given the company’s growing cash reserves and limited domestic growth potential. Notably, the acquisition and the subsequent management services agreement to oversee the hospital’s operations are expected to generate higher revenue and increase the quality of earnings for Raffles Medical Group.
Despite the lower than expected reveal of TCF unit prices, Tan remains optimistic about the company’s future prospects. In addition, the extension of the company’s Changi Transitional Care Facility (TCF) is an encouraging development, which is expected to contribute to the company’s earnings. The bid for this extension was notably the lowest, indicating Raffles Medical Group’s ability to leverage economies of scale and expertise. Despite potential challenges such as lower margins in the health care services segment and the strong Singapore dollar affecting the hospital services segment recovery, Tan stands by his Buy recommendation, albeit with a slightly lower target.
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Raffles Medical Group (RAFLF) Company Description:
Raffles Medical Group Ltd. is an investment holding company, which engages in the operation of medical clinics and other general medical services. It operates through the following segments: Healthcare Services, Hospital Services, and Investment Holdings. The Healthcare Services segment includes the management of medical clinics and other general medical services, provision of health insurance, trading in pharmaceutical and nutraceutical products and diagnostic equipment, and provision of management and consultancy services. The Hospital Services segment provides specialized medical services and operates hospital and business of medical laboratory and imaging center. The Investment Holdings segment refers to the investment properties. The company was founded by Choon Yong Loo and Alfred Loh in 1976 and is headquartered in Singapore.
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