Raffles Medical

Raffles Medical: UOB Kay Hian maintains Buy with $3.78 TP. House note that foreign patients’ admission remains on the uptrend despite the strength of the Singapore dollar and a mixed economic outlook. RMG is committed to exploring overseas opportunities while valuations remain undemanding against a resilient outlook. As at Jun 13, RMG had S$122.5m in net cash (or $0.22/share), vs $98.7m (or $0.18/share) as at Mar 13. This is expected to rise further upon the expected completion of the disposal of Thong Sia Building for $120m. Overall, house note that RMG remains a BUY for it its visible earnings growth and reasonable valuations. Houes DCF-based target price of $3.78 implies 27.3x 2014F PE, close to +1SD to its mean PE of 28.6x. House think it deserves the valuation given its strong cash flow generation and healthy financial position, which could fund potential M&A or other investments.