SINGAPORE (Nov 30): Maybank Kim Eng is maintaining its “buy” call on Singapore Medical Group (SMG) with a target price of 78 cents on increasing market share and overseas expansion.
However, SMG’s management highlighted that given the limited industry growth in Singapore, it has to focus on consolidation and gaining market share to grow.
The group is currently targeting further gains in market share and the consolidation of five key specialties in Singapore, including obstetrics & gynaecology (O&G), oncology, health screening, paediatrics and aesthetics via a combination of acquisitions and recruitment.
In a Thursday report, analyst John Cheong says, “Acquisitions will enable rapid access into new specialities, while recruitment of young doctors will ensure good succession planning and scalability.”
The analyst notes that developing a good brand and reputation could serve as an effective springboard for overseas expansion as patients in overseas markets also value safety and reliability.
Meanwhile, SMG’s overseas markets have also shown good progress.
The group’s operations in Vietnam is achieving a larger scale than Singapore in terms of the number of doctors, with about 15,000 sf of medical centres and around 60 doctors, compared to 45 doctors in Singapore.
Its paediatrics speciality is the biggest there, followed by O&G and health screening.
In addition, one of the medical centres in Vietnam has also achieved profitability, while the second one is expected to be profitable by end-2018.
On the other hand, the group’s business in Indonesia is showing healthy progress and has broken even recently after more than three years of operations.
As at 3.15pm, shares in SMG are trading at 58 cents or 2.6 times FY18 book.
