SINGAPORE (Oct 4): UOB KayHian is maintaining its “buy” call on Singapore O&G (SOG) with a target price of 59 cents.
This followed the group’s announcement that it has entered into a service agreement to collaborate with KL Fertility & Gynaecology Centre (KLFGC) to provide Assisted Reproductive Technology (ART) services to existing and new patients of SOG.
See: Singapore O&G to provide Assisted Reproductive Technology
KLFGC is a wholly owned subsidiary of the Australian-based Monash IVF Group.
Under the agreement, the collaboration will allow SOG to offer existing and new patience ART services such as In-Vitro Fertilisation (IVF) as well as Intracytoplasmic Sperm Injection (ICSI) procedures, a form of IVF used to treat severe cases of male-factor infertility.
The services are expected to commence by end of this year.
This collaboration is limited to the Singapore market only and for an initial term of 36 months.
In a Monday report, UOB Kay Hian says, “We view the collaboration positively as it will allow SOG to tap on new patient demand for IVF, which the group does not offer previously. Moreover, it serves as a complementary and synergistic offering to the group's value chain, allowing for cross-selling to other services such as O&G as well as paediatrics should the IVF be a success.”
This research house believes that this collaboration could also allow the group to be more competitive in its pricing as costs in Malaysia are typically cheaper.
As at 11.50am, shares in SOG are trading at 47 cents or 25.3 times 2017 book with a dividend yield of 3.3%.
