SG: MARKET PULSE: Raffles Medical, Hutchison Port HT (27 Sep 2013)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.61

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.84

MARKET PULSE: Raffles Medical, Hutchison Port HT

27 Sep 2013

KEY IDEA Raffles Medical Group: Looking for overseas opportunities Raffles Medical Group (RMG) recently announced that it has entered into a framework agreement to collaborate on the proposed development of an integrated international hospital with more than 300 beds in Shanghai, China. Negotiations on the finalisation of terms will likely take place over a timeframe of six months to a year, while relevant regulatory approval is also required. Recall that RMG is also in the process of exploring an integrated international hospital collaboration in Shenzhen, China. Should these negotiations be successful, it would allow RMG to expand its operations overseas. We are positive on RMG's decision to explore business expansion opportunities in China given the immense growth prospects, although regulatory uncertainties would likely be the largest risk, in our view. We roll forward our valuations on RMG to 29x FY14F EPS, which consequently bumps up our fair value estimate from S$3.42 to S$3.61. ReiterateBUY. (Wong Teck Ching Andy) MORE REPORTS Hutchison Port Holdings Trust: Refinancing an important boost According to Dow Jones, Hutchison Port Holdings Trust (HPHT) has secured a US$3.6b refinancing loan which comprises three tranches - a US$1b one-year loan, a US$1.6b three-year loan and a US$1b five-year loan. The one-year tranche is at an interest rate of 0.6% above Libor, while the three-year and five-year tranches are 1.1% and 1.4% above Libor respectively. On a blended basis, we estimate that the interest rate cost for this loan is ~1.5%, dramatically lower than the 2.5% rate which management had previously guided. Updating our model to reflect the lower future interest expense, we raise our DDM-based FV to US$0.84 from US$0.76 and maintain a BUY rating on HPHT. We estimate that HPHT is currently trading at an attractive FY14F dividend yield of 7.9%. (Sarah Ong)

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NEWS HEADLINES - US stocks rose on Thu, with the S&P 500 rebounding from its longest losing streak this year, as a larger-than-expected drop in jobless claims mostly overrode worries about a budget standoff on Capitol Hill. - Singapore's 3Q GDP may fall by as much as 5%, warn economists as they take stock of the latest industrial production numbers, which revealed a continuing weakness in the key electronics sector. - Demand in all segments of the property market slumped in Jul following the introduction of the total debt servicing ratio (TDSR) framework in late Jun. - SATS Ltd and its subsidiaries are extending their hold over the local cruise industry by buying Singapore Cruise Centre from Temasek Holdings for S$110m. - Structural steel specialist TTJ Holdings reported an 11% fall in net profit to S$14.87m for the full year ended Jul 31. - Sysma Holdings has won a S$7.5m contract to build a two-storey Good Class Bungalow at Jervois Hill. Work starts next month and will take 18 months to complete.