HealthCare Providers & Services - CGS-CIMB Research 2018-08-20: National Day Rally 2018 ~ Keeping Healthcare Affordable

SGinvestors.io

RAFFLES MEDICAL GROUP LTD SGX:BSL IHH HEALTHCARE BERHAD SGX:Q0F HEALTH MANAGEMENT INTL LTD SGX:588

HealthCare Providers & Services - National Day Rally 2018: Keeping Healthcare Affordable

• The prime minister addressed cost of living pressures during the National Day Rally 2018, focusing on housing and healthcare, with more details to be unveiled in 2019.
• Major healthcare changes include
  1. new Merdeka Generation Package,
  2. extension of CHAS to all Singaporeans with chronic conditions, and
  3. building more polyclinics.
• Maintain sector NEUTRAL, with Raffles Medical Group as a potential beneficiary of these new initiatives.

Healthcare financing is a key concern

• During yesterday’s National Day Rally (NDR) 2018, Prime Minister Lee Hsien Loong addressed cost of living pressures, focusing on housing and healthcare. The Ministry of Health will announce further details of the healthcare changes in 2019.
• There will be a new Merdeka Generation Package covering areas such as outpatient subsidies, Medisave top-ups, MediShield Life premium subsidies and payouts for long- term care. This could benefit an estimated 500k Singaporeans born between 1950 and 1959. Recall that, in 2014, an S$8bn Pioneer Generation Package was rolled out for those born in 1949 or earlier, with approximately 450k people having already received benefits of more than S$1.3bn to date.
• The Community Health Assist Scheme (CHAS), a medical subsidy programme for lower- and middle-income earners will now be extended to all Singaporeans with chronic illnesses regardless of income, although benefits will remain tiered according to income. CHAS helps subsidise outpatient treatments at private general practitioners and dentists and covers various chronic conditions, including diabetes, hypertension, stroke, asthma, major depression, dementia and rheumatoid arthritis.
• Increasing its emphasis on primary healthcare to better alleviate chronic conditions and manage medical costs, the government announced the addition of polyclinics in Eunos, Sembawang, Kallang and Bukit Panjang by 2020 and in Nee Soon Central and Tampines North by 2023. These facilities will ensure there will be affordable and accessible primary healthcare services across Singapore.

~ SGinvestors.io ~ Where SG investors share

RFMD a potential beneficiary among listed peers

• Together with the earlier upgrading of the MediShield plan to MediShield Life (greater lifetime protection) and the launch of CareShield Life (financial support for long-term care), the government aims to keep healthcare costs in check and ensure sufficient protection for its citizens as they grow older.
• With one of the largest clinic networks in Singapore (over 80 clinics, all CHAS-approved) and healthcare services accounting for c.40% of its total revenue, we reckon the enhanced government subsidies could lift the local patient load for Raffles Medical Group (SGX:BSL), posing potential earnings upside to our FY19-20F forecasts. Our HOLD call is premised on its near-term overseas gestation costs.
• Overall, we expect demand for Singapore healthcare services to be underpinned by an ageing population and increasing insurance penetration. Maintain sector NEUTRAL with Health Management International (HMI) as our top pick (unchanged).

Highlighted companies

HEALTH MANAGEMENT INTL LTD (SGX:588)  Health Management International (SGX:588) Share Price  Health Management International (SGX:588) Target Price  Health Management International (SGX:588) Analyst Reports  Health Management International (SGX:588) Corporate Actions  Health Management International (SGX:588) Announcements  Health Management International (SGX:588) Latest News  Health Management International (SGX:588) Blog Articles

• Rating: ADD, Target Price S$0.80
• We believe HMI is well positioned to benefit from growing medical tourism in Malaysia given its two established hospitals there.
• Faster ramp-up of its StarMed acquisition in Singapore is a key catalyst.

IHH HEALTHCARE BERHAD (SGX:Q0F)  IHH Healthcare (SGX:Q0F) Share Price  IHH Healthcare (SGX:Q0F) Target Price  IHH Healthcare (SGX:Q0F) Analyst Reports  IHH Healthcare (SGX:Q0F) Corporate Actions  IHH Healthcare (SGX:Q0F) Announcements  IHH Healthcare (SGX:Q0F) Latest News  IHH Healthcare (SGX:Q0F) Blog Articles

• Rating: ADD, Target Price RM6.86
• A leading private healthcare provider with a diversified presence, IHH continues to add capacity in its key existing and new markets.
• Potential catalysts include improving earnings from Gleneagles Hong Kong (GHK).

RAFFLES MEDICAL GROUP LTD (SGX:BSL)  Raffles Medical (SGX:BSL) Share Price  Raffles Medical (SGX:BSL) Target Price  Raffles Medical (SGX:BSL) Analyst Reports  Raffles Medical (SGX:BSL) Corporate Actions  Raffles Medical (SGX:BSL) Announcements  Raffles Medical (SGX:BSL) Latest News  Raffles Medical (SGX:BSL) Blog Articles

• Rating: HOLD, Target Price S$1.19
• A beneficiary of an ageing and better insured population in Singapore, RFMD will see capacity expansion in 2018F from both hospital extension and the upcoming opening of Chongqing hospital.

NGOH Yi Sin CGS-CIMB Research | https://research.itradecimb.com/ 2018-08-20

SGX Stock Analyst Report HOLD Maintain HOLD 1.190 Same 1.190

ADD Maintain ADD 6.860 Same 6.860

ADD Maintain ADD 0.800 Same 0.800