News of the further opening of Singapore’s borders has pushed RHB Group Research to maintain its “buy” call on Raffles Medical, but at a revised target price of $1.65.

This is up 20 cents from its previous $1.45 call and is believed to give the counter a 12% upside from its $1.48 price on Oct 11, analyst Shekhar Jaiswal writes in a research note.

“Our new target price implies 2022F P/E of 39x, which is in line with the P/E multiple for regional (ASEAN) healthcare operators,” he explains.

Jaiswal’s move comes as the healthcare operator – which is the sole provider of Covid-19 Polymerase Chain Reaction (PCR) tests at Changi Airport – is expected to benefit as Singapore opens up vaccinated travel lanes (VTL) with more countries. 

See: Imminent reopening of borders brings opportunities for Raffles Medical : RHB

“Up to 3,000 passengers could enter Singapore daily, once all eleven VTLs are operational,” explains Jaiswal.

Passenger arrivals from the 11 VTL countries accounted for around 10% of Changi Airport’s pre-Covid-19 arrivals. As such, Jaiswal reckons Raffles Medical will benefit from having more on-arrival PCR tests to administer.

Meanwhile, the analyst believes the company’s near-term revenue growth will be supported by the conversion of the [email protected] facility into a dedicated Covid-19 treatment facility (CTF).

This will be among the five CTFs set up over the past two weeks to augment the capacity of hospitals. 

Going forward, Jaiswal is expecting Raffles Medical to have a 5% to 13% increase in its profit between 2021 to 2023, amid better operating metrics.

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Key risks he foresees include delays in the reopening of Singapore’s borders as well a push back in the EBITDA breakeven timeline for the Raffles Hospital in Chongqing. 

As at 4.35pm, shares in Raffles Medical were down 2 cents or 1.35% at $1.46.

Cover image: file photo