SINGAPORE (March 27): OCBC Investment Research has initiated coverage on Health Management International (HMI) at “buy” with a fair value of 80 cents, advocating the counter as a “healthcare provider with an edge” and one that is set for sustainable growth over the long term.
In a report last Friday, lead analyst Jodie Foo highlights the group’s strong track record in management execution along with its unique adaption of an independent clinic model for the hospitals under its umbrella, which has in turn paved the way for better attraction and retention of their doctors.
Foo also notes that the group – having turned its once-unprofitable Mahkota Medical Centre (MMC) hospital in Malacca and grown Regency Specialist Hospital (RSH) from “an empty building in Johor into an established, profitable hospital” – went on to display consistent growth in estimated core earnings over FY11-16.
“Being the first to address a lack of certain treatment methods has also been one of HMI’s strengths, in our view,” he adds.
Looking ahead, the analyst believes HMI’s multi-pronged strategy to broaden its scope of specialties as well as expand its facilities, capacity building and efficiency initiatives, will provide a further boost to the group’s sustainability profitability outcomes ahead.
This is in addition to a new medical block extension which RSH will soon start works on, and is slated to double its existing capacity when completed in 2020.
“HMI’s growth story is further supported by a backdrop of favourable secular trends, greater private insurance coverage, and encouraging government initiatives for the local healthcare and medical tourism sector… We believe the group is on a healthy growth momentum, backed by a multi-strategy approach and strong management team,” says Foo.
Shares of HMI closed 2 cents lower at 63 cents on Monday.
