SINGAPORE (Oct 19): RHB is maintaining its “buy” call on Singapore Medical Group (SMG) with a target price of 79 cents, as the group announced new acquisitions and hires.
SMG this morning announced that is acquiring Babies and Children Specialist Clinic at Mount Alvernia Medical Centre for $7.9 million, which came on the heels of other recently acquired clinics in Toa Payoh and Bishan.
See: Singapore Medical Group acquires paediatric clinic for $7.9 mil
With this new acquisitions, the group is not just one of the biggest practitioners in the private sector dedicated towards women’s health and wellness, but now with also a focus on children.
In a Thursday report, analyst Jarick Seet says, “Efforts would be committed to grow SMG’s paediatric practice, identify and mentor talented paediatricians. This also expands the group’s portfolio of clinics to 36.”
The group also has hired four specialists in the disciplines of paediatrics, obstetrics & gynaecology and cardiology. They are targeted to join the group by 1Q18.
Meanwhile, SMG’s management has expressed interest in expanding into new medical segments such as cardiology, dental paediatrics and aesthetics.
“However, it is likely to be making smaller acquisitions than before, targeting single-digit multiple acquisitions,” says Seet.
With the group’s turnaround now further validated by both organic and inorganic growth, the analyst expects the group to make more accretive – but smaller-sized – acquisitions in the near term, thereby hastening its growth.
It would also be hiring more doctors, while optimising processes to improve its utilisation.
“We expect a stronger 2H17, mainly due to a seasonally stronger 2H, as well as the full earnings accretion from its Astra Women's Specialist group of clinics and paediatric acquisitions.” says Seet.
As at 2.40pm, shares in SMG are trading at 63 cents or 28 times FY17 earnings.
