Raffles Medical Group

Raffles Medical Group: CIMB maintains Add with $3.68 TP. The house note that RFMD’s asset-heavy approach is timely. The use of gearing is a good departure from its conservative style previously and should strengthen its resolve to succeed given a more efficient capital structure. Dividends are not at risk, while the asset-recycling theme has also emerged. The house lower its FY14 EPS to account for initial project and funding costs, but raise FY16 EPS for additional capacity. Maintain Add rating and target price, based on 23x CY15 P/E, in line with its regional peers. Higher healthcare dollars from the expansion of Raffles Hospital and the successful development of integrated international hospitals in China with its JV partners should catalyse the stock.