MARKET PULSE: Raffles Medical (10 Oct 2012)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.82

MARKET PULSE: Raffles Medical

10 Oct 2012

KEY IDEA Raffles Medical Group: Time to revisit this stock Summary: We expect the seasonally stronger 2H trend for Raffles Medical Group (RMG) to continue in FY12, despite rising staff costs. This is supported by expected traction gains in its patient loads and leeway to raise its charges. We also believe that the commencement of operations at RMG's new Specialist Centre in 1H13 would help boost its net margin from 17.3% in FY12F to 17.7% in FY13F. While we are retaining our forecasts, we roll forward our valuations on RMG to 24x FY13F EPS. This correspondingly bumps up our fair value estimate from S$2.63 to S$2.82. We upgrade RMG from Hold to BUY given potential total returns of 15.8%. Current valuations also appear favourable vis-à-vis its direct comparable peers, while the continued macroeconomic uncertainties would also provide an investment merit for defensive counters such as RMG. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks fell on Tuesday as investors worried about the earnings season and the IMF reduced its global growth forecast. The Dow fell 0.8% to 13,473.53. The S&P 500 Index declined 1% to 1,441.48. - Mr. Lim Ming Yan, who is currently CapitaLand's COO, will become the president and CEO of CapitaLand from 1 Jan 2013. - United Overseas Bank has announced that it intends to issue US$500m 2.875% fixed rate subordinated notes due 2022 callable in 2017. - AIMS AMP Capital Industrial REIT registered a 5.6% uplift in the value of its portfolio, valuing the portfolio at S$965.7m as at 30 Sep 2012. - An indirect subsidiary of Enviro-Hub Holdings Ltd has secured the rights to purchase a property at 8 Tuas View Circuit for a cash consideration of S$8.4m. - Cheung Woh has reported a 4.7% YoY decline in 2Q13 net profit to S$553k. Revenue contracted 56% to S$15.8m. - Mirach Energy's subsidiary has started drilling two new infill wells at the central area of Kampung Minyak Oil Field in South Sumatra, Indonesia. - UOB Kay Hian Holdings has entered into a share purchase agreement to acquire the entire issued and fully paid-up share capital of A.A. Anthony Securities Sdn Bhd for MYR165-170m.