MAYBANK initiated coverage on Thomson Medical with “buy” and a target price of S$0.08.
The move came amid optimism over the healthcare provider’s long-term growth plans, given its strategic presence in Malaysia and recent acquisition of FV Hospitals in Vietnam.
The target price of S$0.08 implies a potential upside of 50.9 per cent from the counter’s last trading price of S$0.053 as at the midday trading break on Wednesday (Feb 28). Shares of Thomson Medical were up 1.9 per cent or S$0.001 at the time.
It is pegged to an FY2025 enterprise value that is 23 times earnings before interest, taxes, depreciation and amortisation, which is 0.5 standard deviation below Thomson Medical’s historical mean.
“While trading at a premium to peers, we think this is justifiable given its strong portfolio of healthcare assets in the region, which offers high growth potential,” analyst Eric Ong said in the Tuesday report.
Most recently, the mainboard-listed group expanded to Vietnam by acquiring FV Hospital for nine trillion dong (S$494.2 million). As part of the deal, the group acquired Far East Medical Vietnam, which includes FV Hospital and a network of primary and specialist clinics.
“This paves the way for further inroads into one of South-east Asia’s fastest-growing healthcare markets, including the huge potential for medical tourism in the country,” said Ong.
In Johor, Malaysia, the group owns 9.2 hectares of waterfront land in Iskandar Malaysia and Johor Bahru’s city centre, which “holds immense potential” for monetisation.
It also owns Thomson Iskandar Medical Hub, a 500-bed tertiary hospital which could stand to benefit from the establishment of the Johor-Singapore Special Economic Zone when completed within the next few years.
In Singapore, the group is looking to maximise its hospital bed capacity in anticipation of a rise in baby deliveries in the Year of the Dragon.
Maybank noted that Thomson Medical Centre delivers around 25 per cent of Singapore’s babies annually and has some 40 to 50 per cent in market share of live birth deliveries in the private sector.
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