Raffles Medical Group: Looking for overseas opportunities
Raffles Medical Group (RMG) recently announced that it has entered into a
framework agreement to collaborate on the proposed development of an
integrated international hospital with more than 300 beds in Shanghai,
China. Negotiations on the finalisation of terms will likely take place
over a timeframe of six months to a year, while relevant regulatory
approval is also required. Recall that RMG is also in the process of
exploring an integrated international hospital collaboration in
Shenzhen, China. Should these negotiations be successful, it would allow
RMG to expand its operations overseas. We are positive on RMG’s
decision to explore business expansion opportunities in China given the
immense growth prospects, although regulatory uncertainties would likely
be the largest risk, in our view. We roll forward our valuations on RMG
to 29x FY14F EPS, which consequently bumps up our fair value estimate
from S$3.42 to S$3.61. Reiterate BUY. (Wong Teck Ching Andy)
MORE REPORTS
Hutchison Port Holdings Trust: Refinancing an important boost
According to Dow Jones, Hutchison Port Holdings Trust (HPHT) has secured
a US$3.6b refinancing loan which comprises three tranches – a US$1b
one-year loan, a US$1.6b three-year loan and a US$1b five-year loan. The
one-year tranche is at an interest rate of 0.6% above Libor, while the
three-year and five-year tranches are 1.1% and 1.4% above Libor
respectively. On a blended basis, we estimate that the interest rate
cost for this loan is ~1.5%, dramatically lower than the 2.5% rate which
management had previously guided. Updating our model to reflect the
lower future interest expense, we raise our DDM-based FV to US$0.84 from
US$0.76 and maintain a BUYrating on HPHT. We estimate that HPHT is
currently trading at an attractive FY14F dividend yield of 7.9%. (Sarah
Ong)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
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