Raffles Med

Raffles Med: Goldman Sachs is expecting private healthcare spending to decelerate materially in 2015. Growth of +4% CAGR over 2015-16e expected, similar to 2014e, but much lower vs +13% CAGR over 2009-13. Though pick-up in economic and consumer spending growth over 2015E-2016E, driven by exports from a stronger global (especially US) economy, and favorable demographics supporting demand are visible, private healthcare sees competition from govt hospitals given new initiaves like Pioneer Generation Package and Medishield Life). Stronger S$/IDR was a key reason why many private hospitals reported a dip in medical tourists from Indonesia last year, and the S$ is expected to outperform ASEAN currencies this year. Public sector nurses wages are also going up via special pay increases over the next 2 years. Private sector expected to follow. IHH implemented a special pay hike in 3Q14, and Raffles Med likely to follow in 4Q14. Margins will likely be impacted. Goldman Sachs has a Sell on Raffles Med with increased TP of $3.75 from $3.10