Raffles Medical Group - RHB Invest 2021-09-21: Awaiting Reopening Of Borders; Keep BUY


Raffles Medical Group - Awaiting Reopening Of Borders; Keep BUY

  • Raffles Medical (SGX:BSL) should benefit from the planned reopening of Singapore’s domestic economy and borders. The vaccination programme will taper off, but testing will continue, as the Government looks to treat COVID-19 as an endemic, and gradually reopen its borders to more visitors. This should support Raffles Medical’s near-term revenue growth.
  • The gradual return of patients to its clinics, likely return of some foreign patients to Singapore, and its Chongqing hospital breaking even (for EBITDA) in 2022F should drive earnings in the next fiscal year.
  • Keep BUY and S$1.45 target price, 4% upside, ~2% 2022F yield.

Community care facilities (CCF) to augment current hospital capacity.

  • To augment the capacity of hospitals, so only COVID-19 patients who need specialised medical attention will be hospitalised, the Ministry of Health (MOH) plans to set up a new category of CCF for COVID-19 patients who are generally well, but have underlying health conditions that require closer monitoring.
  • As of early September, there were seven CCF in Singapore – one of these is Singapore Expo’s Connect@Changi, which is run by Raffles Medical. The Connect@Changi CCF will provide 50 such beds to cater for COVID-19 patients with underlying health conditions, by Friday.

More COVID-19 testing as borders reopen.

  • Raffles Medical is the exclusive healthcare service provider at Changi Airport, and the sole provider of COVID-19 polymerase chain reaction (PCR) tests for post-arrival air travellers into Singapore. For passengers arriving into Singapore under the Vaccinated Travel Lane (VTL) from Germany and Brunei, Raffles Medical administers the on-arrival as well as day-3 and day-7 PCR tests.
  • Minister of Transport S Iswaran has said that there is a likelihood of the VTL scheme being extended to other countries as well. With the gradual reopening of borders, Raffles Medical should benefit from increased COVID-19 testing. In addition, as Singapore looks to treat COVID-19 as endemic, we can expect more frequent COVID-19 PCR tests at workplaces and in the community to supplement antigen tests, which tend to be less accurate.

Vaccination drive to taper off.

Shekhar Jaiswal RHB Securities Research | https://www.rhbinvest.com.sg/ 2021-09-21
SGX Stock Analyst Report BUY MAINTAIN BUY 1.45 SAME 1.45