Raffles Medical

Raffles Medical: announced that it was again unsuccessful in its re-submission for change of use of the commercial podium of 30 Bideford Road (Thong Sia building) to a medical centre. Nomura notes this rejection was not entirely unexpected by the market; stock reaction should be neutral to mildly negative. Nomura estimates that rental income on a fully rented basis should bring in operating income of at least ~$4m. Alternatively, the year-end valuation for the property is slightly above the purchase price and, as such, the company will at least recoup its initial investment cost in a sale. Nomura believes RFMD does not necessarily need to be in the main Orchard area to operate a specialist centre. In the meantime, thinks that RFMD could expand its operations in rented premises, while buying time and optionality to purchase an alternative location to house its planned specialist centre. The house keeps its Neutral rating and TP $2.81.