SG: MARKET PULSE: Raffles Medical, Olam (2 Sep 2013)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.42

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

MARKET PULSE: Raffles Medical, Olam

2 Sep 2013

KEY IDEA Raffles Medical Group: Operations to remain resilient Summary: Raffles Medical Group's (RMG) share price has fallen ~5% since the start of Jul, and we believe this may have been caused by concerns over the impact of the weakening IDR on RMG's Indonesian patient visits, coupled with the broad market weakness. RMG updated us that it has not felt any significant effects of this on its medical tourism figures. We believe this is because a larger proportion of its foreign patients come to RMG for the treatment of more acute illnesses rather than elective procedures. Meanwhile, RMG would recognise a net gain of ~S$21.4m from the disposal of Raffles Medical Management (which owns the Thong Sia commercial podium) for S$120m, and this would bolster its cash balances. Maintain BUY and S$3.42 fair value estimate on RMG. (Wong Teck Ching Andy) MORE REPORTS Olam Int'l: HOLD with lower S$1.45 fair value Summary: Olam International Limited (Olam) posted FY14 revenue of S$20.8b, up 22%, and was around 5% ahead of our forecast; versus reported net profit, core earnings came in much lower at S$314.3m, but still up 13%, and was about 3% ahead of our estimate. Olam declared a final dividend of S$0.04/share, unchanged from last year. In view of the eroding profitability, we pare our FY14F core net profit figure by 16% (but still expect to see decent earnings growth in FY15). This also drops our fair value from S$1.73 to S$1.45, still based on 10x FY14F EPS. Maintain HOLD. (Carey Wong)

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NEWS HEADLINES - US stocks declined on Fri, with the Dow and S&P 500 recording their worst month since May 2012, as Wall Street considered a possible US strike against Syria. - The total market capitalisation of Singapore-listed companies suffered its steepest drop of 4.8% in over a year as tension in Syria and anticipation of US central bank tightening dampened sentiments in Aug. - The Singapore banking sector's loans-to-deposits ratio crossed 100 for the first time since the Asian financial crisis, providing evidence that MAS recent moves to curb excessive lending were timely. - The Singapore government has raised development charge rates for industrial use by around 15% on average, while leaving the rates for commercial use completely untouched. - Changi Airport's mega Terminal 5 will be able to handle 50m passengers per year when it opens in the mid-2020s. This is 75% of the capacity of the existing three terminals. - S i2i posted a net loss of US$11.4m for 4QFY13, compared with a net loss of US$115.7m a year ago.