Standard Chartered lifts Raffles Medical (R01.SG) target to $2.50 from $1.53, offering potential upside of 17%; keeps at Outperform, says Dow Jones.

Stanchart says from 2000 to 2009, firm increased group operating margins from 12% to 22%; this driven by new Raffles Hospital, continued expansion of specialty services; tips further margin upside.

House thinks firm’s management intentionally adopted defensive business model, which underpinned by its leadership in primary healthcare, to create strong referral system for its specialist business, hence forming franchise value, mitigate dependency on star doctors and exercise strong cost management.

“As the economy continues to recover, Raffles’ primary care business will benefit as the corporate segment is highly sensitive to the economy. Growth in foreign patient volumes should also accelerate. The group’s recent expansion into China may also deliver long-term growth,” says house.

Notes key risks to firm are mass exodus of doctors, macroeconomic downturn affecting foreign patient volumes, or medical incident that might damage its reputation and brand.

Stock last +4.1% at $2.28.