Friday, September 27, 2013
Raffles Medical: OCBC maintains Buy with $3.61 TP. The grp recently announced that it has entered into a framework agreement to collaborate on the proposed development of an integrated international hospital with more than 300 beds in Shanghai, China. Negotiations on the finalisation of terms will likely take place over a timeframe of six months to a year, while relevant regulatory approval is also required. Recall that RMG is also in the process of exploring an integrated international hospital collaboration in Shenzhen, China. Should these negotiations be successful, it would allow RMG to expand its operations overseas. House positive on RMG’s decision to explore business expansion opportunities in China given the immense growth prospects, although regulatory uncertainties would likely be the largest risk, in our view. Roll forward valuations on RMG to 29x FY14F EPS.