SINGAPORE (April 5): Maybank Kim Eng Research says Singapore Medical Group’s share price correction of close to 8% from its 52-week high presents a “good buying opportunity”.
According to Maybank analyst John Cheong in a Tuesday report, the price correction was due to an absence of positive news.
However, he reiterates that SMG’s recent earnings turnaround and major acquisition stand it in good stead.
(See: Singapore Medical Group swings around with record FY16 earnings of $2.4 mil)
To this end, Maybank is keeping its “buy” recommendation on SMG with an unchanged price target of 67 cents.
Cheong believes that organic expansion and increased marketing efforts will help drive SMG’s growth.
The specialist healthcare services provider targets to double its number of specialists in the obstetrics and gynaecology segment to 16 over the next three years.
In addition, Cheong says SMG has a healthy merger and acquisition pipeline, and has already identified several M&A targets.
“As it strengthens its brand name and track record, more senior specialist groups are increasingly interested in joining SMG and appear willing to provide more favourable terms,” he says.
SMG is also looking to secure strategic shareholders following its recent capital injection from Korean healthcare group CHA Medical Group.
(See: Singapore Medical Group could re-rate following Korean tie-up)
Cheong says that SMG could benefit from CHA’s established expertise in the healthcare segment, as well as leverage on its brand name to tap on the underserved Korean communities in Singapore and Vietnam, which total some 150,000 individuals.
As at 11.39am, shares of Singapore Medical Group are trading 1 cent higher at 57.5 cents.
