RAFFLES MEDICAL GROUP LTD
R01.SI
First overseas acquisition since 1997
- Acquiring 55% stake in International SOS MC Holdings (MCH) for SGD34.3m, with 10 clinics in China, Vietnam & Cambodia.
- Insignificant earnings contribution but a good springboard to gain instant access to new markets. Expect synergies from patient referrals to its SG hospital & future China hospital.
- Maintain BUY, EPS and DCF TP of SGD5.40. Catalysts from further progress in China and more expansions.
Brownfield expansion in China, Vietnam & Cambodia
- Raffles Med has proposed to acquire a 55% stake in MCH for SGD34.3m. MCH operates 10 clinics in countries/cities where Raffles Medical does not have a presence in - six in China, three in Vietnam and one in Cambodia. The vendor, AEA International Holdings, is an established global service provider which offers medical assistance, security, evacuation, travel and consulting services to customers in 92 countries. It started in Singapore in 1985 to provide emergency medical assistance services in Southeast Asia, before acquiring International SOS assistance in 1998 and renamed the business as International SOS.
Greater commitment to overseas expansion; BUY
- We understand this is Raffles Med’s first major overseas acquisition since 1997, when it acquired a medical centre in Hong Kong. Along with the recently finalised Shanghai Hospital Project, this further substantiates its commitment to growing beyond Singapore.
- The deal is not expected to contribute meaningfully to the group’s earnings at first. But it will provide instant access to new markets, where it could scale up and establish a wider referral network for its Singapore hospital and future China hospital.
Maintain BUY and TP
- Maintain BUY and DCF TP at SGD5.40 (WACC 8.1%/6.3% for SG/CHN). Catalysts will be further progress in China as well as more expansions.
John Cheong | http://www.maybank-ke.com.sg/ Maybank KE 2015-08-31
5.40
Same
5.40
