Raffles Medical:
- A foreign broker has slashed its rating for Raffles Medical from Buy to Hold, after it cited that growth in Singapore's private healthcare sector could come under pressure.- The brick wall on growth stems from reduced private demand on the back of close working relations between the Ministry of Health and the insurance industry.
- Additionally, the upcoming increase in MediShield Life Integrated Plan premiums next year will also likely to dampen demand for private healthcare services in favour of public hospitals.
- Further, the broker sees public hospitals serving a rising proportion of elderly patients, from the 90% historically.
- Lastly, there is potential cost escalation from the Raffles Hospital extension, with their Chinese venture ramp-up.
- Hence, the house lowers its FY16-18e earnings forecast by 7-18%, below consensus estimates, but maintains its TP of $1.60/share.
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