Operations at healthcare operator Raffles Medical is not likely to have a material disruption following the recent measures on hospital capacity management and load balancing, says Shekhar Jaiswal.
“We believe Raffles Medical’s hospital and specialist outpatient clinic, which have started to witness a gradual return of domestic patient load, could see a minor disruption until the Ministry of Health (MOH) reverses its current announced measures,” elaborates the analyst from RHB Securities.
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However, this may be offset by the release of additional beds in the accident and emergency department to patients who cannot be taken to Tan Tock Seng Hospital, notes Jaiswal.
This move is part of the Emergency Care Collaboration plan that has been in place for the past few years.
Raffles Medical’s operations of 15 vaccination centers will also help to offset any disruptions it may face, says Jaiswal.
Going forward, the analyst is expecting the healthcare provider’s profits to grow by over 25% in the next two years.
This will be aided by a gradual return of local patient load, revenue support from Singapore’s vaccination drive and the likely return of medical tourists in 2022, he explains.
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Contributions will also come from its Chongqing hospital achieving EBITDA (earnings before interest, taxes, depreciation and ammortisation) breakeven in 2022, adds Jaiswal.
To this end, he is maintaining his “buy” call and target price of $1.29 on the counter. This is said to give it a 14% upside from its $1.13 price on May 7, says Jaiswal.
“Our target price implies a 43.5x blended forward P/E, which is in line with the peer average. We believe valuations are compelling, given the strong (over 25%) profit growth expected during the forecast period,” he adds.
As at 12.39pm, shares in Raffles Medical were down 4 cents or 3.54% to $1.09.
