Singapore Medical Group - RHB Invest 2017-03-01: Soaring To New Heights

Singapore Medical Group - RHB Invest 2017-03-01: Soaring To New Heights SINGAPORE MEDICAL GROUP LTD 5OT.SI

Singapore Medical Group - Soaring To New Heights

  • SMG has turned profitable with SGD2.4m PATMI for FY16 due to robust growth in both revenue streams, backed up higher margins due to operational efficiencies as well. 
  • Going forward, we expect SMG to continue to enjoy improved margins from a higher patient load, with earnings to kick in from the Astra Group acquisition. 
  • With a war chest of over SGD20m going forward, we expect SMG to also make more accretive acquisitions in the near term, hastening its growth. 
  • Maintain BUY on SMG with a higher DCF-backed TP of SGD0.65 (from SGD0.59, 10% upside).



Aspiring to be a pan-Asian healthcare provider. 

  • With its latest JV in Vietnam, a Korean strategic investor and coupled with its presence in Indonesia, Singapore Medical Group (SMG) is well positioned for its next phase of growth as a pan-Asian specialist healthcare provider.


Providing a war chest to fund for future acquisitions. 

  • The Group would issue 30m new ordinary shares to CHA Healthcare Co (CHC) at SGD0.50/share via a private placement which is likely to raise up to SGD15m. This ought to provide SMG with an additional SGD15m funds and further build up their war chest to fund for further acquisitions down the road. 
  • With this war chest, we think that the company would likely be able to speed up its inorganic growth at a much faster pace. Hence. we should expect some of these acquisitions to occur in the near-term. 
  • With its prudent management team, SMG would likely consider opportunities in Singapore and the South-East Asian region, hastening its transformation into a pan-Asian private healthcare specialist.


Maintain BUY on SMG with a higher DCF-backed TP of SGD0.65. 

  • With a war chest of over SGD20m going forward, we expect SMG to also make more accretive acquisitions in the near term, hastening its growth. 
  • In addition, we expect its organic growth in its health and imaging diagnostic segments to remain strong. 
  • As a result, we maintain BUY on SMG with a higher DCF- backed TP of SGD0.65, peg to a 27x FY18F P/E.




Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2017-03-01
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.65 Up 0.590



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