Raffles Hospital

Healthcare China / Raffles Hospital: recently the govt launched a series of policies and opened up the medical service sector to social capital. Private hospitals and medical service providers may also enjoy favorable tax policies and local govt subsidies. Moreover medical services in private hospitals can be covered by govt medical insurance schemes as well. According to the Ministry of Health, there were 8053 private hospitals by end ’11, accounting for 37.2% of the total no of hospitals in China. As at end Mar ’12, the no reached 8864, +21.2% yoy. Moreover the no of pte hospital visits in 1Q12 was 51.2m, +37.6% yoy, indicating that private hospitals will become a new catalyst for mkt expansion and help to ease the pressure of ltd service capacity in large hospitals. The growing private hospital sector in China offers a positive backdrop for Raffles Medical which is making inroads into this new market. Recall which Chairman Loo Choon Yong said in Feb this yr, that the group’s loss making medical centre in Shanghai (opened in 2010) may turn profitable next yr as costs stabilize and more patients come. The group has also said previously that it is prepared to invest up to $300m to build a 300-bed hospital in China, to tap the rising affluence and growing demand fro higher quality healthcare in China. The stock trades at 21.8x P/E, offers 1.9% yield. The Street has 6 Buys, 5 Holds and 1 Sell, with TP btwn $2.46 – 2.90.