Raffles Medical Group

UOBKayhian on 23 Jan 2014

FY13F PE (x): 26.7
FY14F PE (x): 22.8

Land for long-term growth. Raffles Medical Group (RMG) will acquire 1,978.1sqm of land adjacent to its Raffles Hospital from Singapore Land Authority (SLA) for S$105.2m.72% jump in gross floor area. This land has a plot ratio of 5.6x. Together with the approval from the Urban Redevelopment Authority (URA) on its existing hospital, the present gross floor area (GFA) for RMG’s flagship hospital will rise from 307,789sf to 529,578sf  (+72%). Construction on the adjacent land is expected to commence in 2Q14.

Capacity for long-term growth. Maintain BUY with a lower DCF-based target price of S$3.69 (previously S$3.78). Despite the slight reduction in our target price, we view the land acquisition as a good long-term move that will drive growth