SINGAPORE (June 5): Maybank Kim Eng is maintaining its “buy” call on Singapore Medical Group (SMG) with a target price of 78 cents.
In a Monday report, analyst John Cheong says SMG’s multi-disciplinary business model is a good proxy to the highly profitable but fragmented medical specialist segment, where the largest player only commands about 8% market share.
Led by its CEO Dr Beng Teck Liang who has a reputation for turning around struggling companies, SMG has been able to source and secure profitable and synergistic deals.
Tony Tan Choon Keat, SMG’s chairman and largest shareholder, is also an important figure with good connections and experience, having founded Parkway Group.
The group’s model also appeals to young startup doctors, and will attract more senior doctors as the platform grows.
“We estimate a $1 million profit deal could lift EPS by about 7%,” says Cheong.
Cheong expects SMG to record a three-yr EPS CAGR of 72% for FY16-19E.
The FY17E EPS growth of 225% will be driven by the newly acquired Astra Women’s Specialist Group and the proposed acquisition of two pediatric clinics.
SMG also plans to add at least S$1 million M&A earning annually and targets to double the number of women’s health specialists to 16 over the next three years.
The group is also considering adding more equipment to its health screening segment.
SMG shares are trading at 63 cents on Monday.
