Raffles Medical Group (RMG) is targeting the sale of its freehold seven-storey commercial podium which is located near Orchard Road. This is because it has failed to secure regulatory approval for the change of use of the property to a medical centre. The podium is independently valued at S$98m (as at end 2012), a 6.4% premium to its purchase price in Apr 2011. Meanwhile, management is aiming to improve its operating efficiencies by implementing a new Hospital Information System and Electronics Medical Records System. We believe that value has re-emerged for RMG following its drastic 16.5% share price decline from its recent peak. RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%. Rolling forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22). Upgrade RMG from Hold to BUY.
Seeking to sell its commercial podium near Orchard Road
Raffles Medical Group (RMG) recently engaged real estate services firm Jones Lang LaSalle to advise and manage the sale of its freehold seven-storey commercial podium located at 30 Bideford Road. This would be done via a tender process, which closes on 15 Jul. RMG’s decision to sell does not come as a surprise to us, as we had previously flagged the sale of the property as a viable option after its re-application for change of use to a medical centre was unsuccessful. As a recap, RMG completed the purchase of the 42,668 sf building for S$92.08m in Apr 2011. The latest independent valuation of the property was S$98m as at 31 Dec 2012, representing a 6.4% premium to its purchase price. We expect management to utilise the sale proceeds for its expansion plans rather than pay out a special dividend to shareholders. Investment outlay for its Raffles Hospital extension and possible Shenzhen hospital (non-binding Letter of Intent signed) is estimated to amount to S$80-130m and S$150m, respectively (capex to occur in stages).
Enhancing productivity via digitalisation of medical records
Operationally, RMG is seeking to implement a new Hospital Information System and Electronics Medical Records System. We believe this would enhance RMG’s efficiency and improve the quality of delivery of its healthcare services as patients’ records can be easily shared between doctors, nurses and other ancillary services departments. The targeted completion for the implementation is by year end.
Value has re-emerged, upgrade to BUY
RMG’s share price has fallen 16.5% from its peak attained on 11 Apr this year, far more drastic than the 3.7% dip by the STI during the same period. This is despite the fact that RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%. As we now roll forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22) on RMG. We believe that value has re-emerged for RMG following its sharp share price correction, and thus upgrade the stock from Hold to BUY.
Raffles Medical Group (RMG) recently engaged real estate services firm Jones Lang LaSalle to advise and manage the sale of its freehold seven-storey commercial podium located at 30 Bideford Road. This would be done via a tender process, which closes on 15 Jul. RMG’s decision to sell does not come as a surprise to us, as we had previously flagged the sale of the property as a viable option after its re-application for change of use to a medical centre was unsuccessful. As a recap, RMG completed the purchase of the 42,668 sf building for S$92.08m in Apr 2011. The latest independent valuation of the property was S$98m as at 31 Dec 2012, representing a 6.4% premium to its purchase price. We expect management to utilise the sale proceeds for its expansion plans rather than pay out a special dividend to shareholders. Investment outlay for its Raffles Hospital extension and possible Shenzhen hospital (non-binding Letter of Intent signed) is estimated to amount to S$80-130m and S$150m, respectively (capex to occur in stages).
Enhancing productivity via digitalisation of medical records
Operationally, RMG is seeking to implement a new Hospital Information System and Electronics Medical Records System. We believe this would enhance RMG’s efficiency and improve the quality of delivery of its healthcare services as patients’ records can be easily shared between doctors, nurses and other ancillary services departments. The targeted completion for the implementation is by year end.
Value has re-emerged, upgrade to BUY
RMG’s share price has fallen 16.5% from its peak attained on 11 Apr this year, far more drastic than the 3.7% dip by the STI during the same period. This is despite the fact that RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%. As we now roll forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22) on RMG. We believe that value has re-emerged for RMG following its sharp share price correction, and thus upgrade the stock from Hold to BUY.
Incorporating a virtual assistant in hospitality is always a good idea. Here’s why https://www.engati.com/blog/hotel-chatbots
ReplyDelete