Raffles Medical

#Raffles Medical: may see spillover interest, as the closest peer to Thomson. Although Raffles is > double the size of Thomson in terms of revenue, net profit, it trades at trailing PE of just 27x. This compares with Thomson’s 31.4x PE (at $1.75/sh), and Parkway’s 36.5x PE (at takeover price of $3.85/sh). If Raffles valuations were to catch up with Thomson, that would imply at share price of $2.54, vs $2.18 at last close…

Technically, Raffles’ chart is beautiful. The stock is in a longer term uptrend, and appears to have just completed a consolidation phase over the past month. Stochastics is just coming out of oversold levels, suggesting the upward climb may resume again…

Raffles’ 3Q results last wk were in line, but a couple of houses have cited concerns about valuations. The Thomson GO could be a catalyst for analysts to revise their valuations upwards, with Raffles having a scarcity premium now that is the only remaining quality hospital listing in Spore. It remains a potential acquisition target, for the likes of Fortis, which is looking for a foothold in the region.