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Raffles Medical Group Ltd. - Have setbacks changed its fundamentals?

Kiran Rameshchandra

27/3/2013 – Raffles Medical Group (RMG) announced that its resubmission for the change of use of its commercial podium at 30 Bideford Road to a medical centre had been unsuccessful.

It did not specify the reason but traffic congestion in that area could be an impeding factor again.

OCBC Research retained its estimates as it had not incorporated any contribution from group’s proposed new medical centre.

Hence, it maintained HOLD rating with a target price of S$3.01.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question
Question

1. Have setbacks changed its fundamentals?

Raffles Medical’s plan to change the use of the commercial podium at its Thong Sia Building to a medical centre was once again unsuccessful.

This is the second setback faced by the group in as many weeks, as it had only recently lost out on a land tender for the development of a private hospital in Hong Kong to its competitor IHH Healthcare.

Question
Question

2. How optimally will it use Thong Sia Building now?

OCBC research believes management would explore options such as selling the property or retaining the podium as a commercial space and continue renting it out to supplement its income.

It could also open some clinics in the podium and rent out the remaining space.

Question
Question

3. How does it now plan to expand overseas?

Raffles Medical recently lost out to its competitor IHH Healthcare for a bid to run a private hospital in Hong Kong.

The winning bid for the 27,5000 square metre site in Wong Chuk Hang was clinched by a 60% owned indirect subsidiary of IHH Healthcare, GHK Hospital, at a price of HK$1.7 bln or S$273 mln.

Total development cost for the new 500-bed hospital, including land cost, is estimated to cost HK$5 bln.

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

Sofar, we have not had a reply (which is why you are seeing this message).

Sources & further information

Sources
Sources


Statutory disclosure
OCBC Research Report

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