Brokers’ take

Compiled by Leila Lai

HEALTH MANAGEMENT INTERNATIONAL

BUY (MAINTAINED)

FEB 13 CLOSE: $0.55

TARGET PRICE: $0.73

UOB Kay Hian Research, Feb 13

Core net profit of RM31.3 million (S$10.4 million) is in line with expectations, coming in at 51.6 per cent of our full-year estimate.

Health Management International recently acquired a stake in Plus Medical Holdings, a clinic group that operates 16 primary care clinics in Singapore.

The clinic group is in its initial stages of growth and is poised to increase its network.

For Q2 FY19, revenue contribution from StarMed was still negligible.

The group is continuing its efforts in marketing and awareness events as well as continuous recruitment of specialists.

According to management, excluding the impact of gestation costs for StarMed, Q2 FY19 core net profit should have increased 15.5 per cent year on year.

This suggests an impact of about RM2.9 million in the quarter.

Construction of the Regency Hospital's new extension block has begun and is expected to break ground by mid-2019.

Current operations are unaffected with targeted commissioning still scheduled for 2021, expanding Regency's capacity to 380 beds.

We increase our assumption on earnings before interest and tax losses for StarMed to RM7 million to RM9 million in its first three years of operation.

Overall, we trim our FY19-21 net profit forecasts by up to 1.2 per cent.

Maintain "buy" with a lower discounted cash flow-based target price of 73 cents.

While near-term earnings growth is likely to be uninspiring as new expansionary plans take time to ramp up, the group's strategic focus to develop outpatient care through its ambulatory specialist centre and clinics in Singapore is a long-term positive.

FRASERS PROPERTY

BUY (MAINTAINED)

FEB 13 CLOSE: $1.70

TARGET PRICE: $1.98

DBS Group Research, Feb 13

We maintain our "buy" rating on Frasers Property (FP) despite the recent property cooling measures implemented on the property sector as the stock's valuation remains attractive at 0.6 times price/net asset value, and its dividend yield is the highest among developers at more than 5 per cent.

We believe FP is a good defensive play within the sector as it has low exposure to Singapore's residential property market.

FP currently offers a dividend yield of over 5 per cent, the highest among the developers and is comparable to the real estate investment trusts.

Potential catalyst: improved property sales, asset monetisation and improving free float and liquidity.

We maintain our "buy" rating and target price of $1.98.

Our target price is based on 35 per cent discount to revalued net asset value.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision.

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