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Singapore Medical Group kept at ‘buy’ by Maybank on acquisitions, better growth

Samantha Chiew
Samantha Chiew • 2 min read
Singapore Medical Group kept at ‘buy’ by Maybank on acquisitions, better growth
SINGAPORE (Aug 16): Maybank Kim Eng is reiterating its “buy” call on Singapore Medical Group (SMG) with a target price of 78 cents.
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SINGAPORE (Aug 16): Maybank Kim Eng is reiterating its “buy” call on Singapore Medical Group (SMG) with a target price of 78 cents.

This comes as the research house expects a seasonally stronger 2H17, lifted by contributions from two acquisitions and with better organic growth.


See: Singapore Medical Group’s 1H earnings up sixfold to $4 mil on higher revenue

In order to drive growth, SMG is hiring more specialists, improving overseas operations and securing more acquisitions.

SMG hired two new specialists to expand its obstetrics and gynaecology (O&G) segment, which are expected to contribute about $3 million in earnings per annum each.

Currently, the group has 10 O&G specialists and plans to reach 16 in the next three years.

A new 5,500 sqf diagnostic centre at Novena Medical Centre is also in preparation to expand its existing operations.

In a Wednesday report, analyst John Cheong says, “Capex is estimated to be $3 million and this could more than double the revenue of the existing centre.”

After more than a year of gestation period, SMG’s Indonesia operations started to turn around in Jan.

Meanwhile, the group is also growing two of its 15,000 clinics in Vietnam, adding five paediatricians and 4,500 patients.

“SMG aims to further expand in both these markets but will limit investments to around $1 million,” says Cheong.

Looking ahead, the group is seeking more synergistic and EPS-accretive acquisitions in segments where it has less exposure to.

“Due to its improved profile and track record, more targets are knocking on its door and asking valuations have fallen to a more attractive level,” adds Cheong.

Shares in SMG are trading at 62 cents as at 3.11pm.

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