Healthcare Sector - OCBC Investment 2017-06-09: Medical Tourism Still A Concern

Singapore Healthcare Stocks HEALTH MANAGEMENT INTL LTD 588.SI RAFFLES MEDICAL GROUP LTD BSL.SI

Healthcare Sector - Medical Tourism Still A Concern

In a recent news article citing findings by AB Bernstein and medical facilitation travel Global Health and Travel, Singapore was noted to retain its position as one of the top destinations in the region for medical tourism. However, the attractiveness of the “patient experience” in neighbouring countries like Malaysia and Indonesia has improved between 2015 and this year, according to the study.

In addition, we believe that certain hospitals such as Health Management International (HMI)’s in Malaysia offer quality treatment at relatively lower costs than Singapore. Thus, given constant concerns over medical tourism and longer term implications for Singapore, we are positive on Raffles Medical Group (RMG)’s expansion plans to diversify their presence and sustain earnings for the long term, although we are cognizant of start-up costs and execution in the nearer term.
Within the sector, we have a buy rating on both Health Management International HMI [Rating: BUY, Fair Value S$0.80] and Raffles Medical Group RMG [Rating: BUY, Fair Value S$1.60] – the former for their presence and growth plans in Malacca and Johor to maintain a healthy growth momentum.

Jodie Foo OCBC Investment | http://www.ocbcresearch.com/ 2017-06-09

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 0.800 Same 0.800

BUY Maintain BUY 1.600 Same 1.600