Raffles Medical Group 3Q17: Healthy patient volume
■ 9M17 core net profit formed 70% of both our and Bloomberg consensus full-year numbers, deemed in line as 4Q is seasonally stronger.
■ Slight uptick in hospital services in 3Q (+3.1% yoy) led by rising local patient load, but flat medical tourism. Healthcare services down 4.2% yoy on lower insurance income.
■ Hospital extension on track for 4Q17F opening, with projected rental contribution from 2H18F onwards; ISOS was EBITDA positive in 3Q17.
■ More visibility on Chongqing start-up costs. We agree with management’s 3-year EBITDA breakeven period and believe such gestation costs are largely priced-in.
■ Maintain Add on this long-term healthcare play with a higher SOP-based TP.
GL (GLL SP)
Asset Disposal Unlocks Value And Privatisation Potential
At the core of GL is its rare hotel portfolio with >4,700 rooms in prime London. UK/London hotel performance reached a record high in 1H17 with growth expected to continue. GL is also unlocking value through non-core asset disposal with up to US$80m gains expected. We see the potential of a privatisation, noting a prior offer of S$1.25/share. With steady dividends, investors can get paid to wait. Initiate coverage with a BUY and a conservative SOTP-based target price of S$1.185.
Micro-Mechanics (Holdings) Ltd
A record in both revenue and profits
SINGAPORE | TECHNOLOGY | 1Q18 RESULTS
1Q18 revenue and earnings were double the growth rate we expected.
We raise our FY18e earnings by 18% to S$21.7mn. This comes from an upward revision to our forecast in sales growth, from 11% to 25% in FY18e.
Our target price is raised to S$2.50, or 16x PE FY18e. This is in-line with back-end semiconductor valuations.
Well Positioned For An Industrial Sector Rebound
A-REIT delivered another solid quarter of results aided by the contribution from recent acquisitions. The Singapore industrial market is slowly turning around the corner with demand picking up, coupled with positive portfolio rent-reversions registered across all industrial sub-sectors. Management continues to effectively execute its capital recycling strategy to deliver DPU growth with Australia being a key driver. A-REIT remains our Top Pick among the large cap REITs. Maintain BUY with a TP of SGD 2.90 (7% upside).
Check out our compilation of Target Prices