SINGAPORE (Aug 21): Raffles Medical Group, which operates over 80 CHAS-approved clinics in Singapore, could see a lift in its local patient load given the new healthcare initiatives launched by the government.

See: PM Lee unveils healthcare and housing plans to curb cost of living pressures

During Sunday’s National Day Rally speech, Prime Minister Lee Hsien Loong addressed cost of living pressures, focusing on major healthcare changes including a new Merdeka Generation Package, extension of CHAS to all Singaporeans with chronic conditions and the construction of more polyclinics.

The new Merdeka Generation Package will cover areas such as outpatient subsidies, Medisave top-ups, MediShield Life premium subsidies and payouts for long-term care. This could benefit an estimated 500,000 Singaporeans born between 1950 and 1959.

Back in 2014, an $8 billion Pioneer Generation Package was rolled out for those born in 1949 or earlier, with 450,000 people having already received benefits of more than $1.3 billion to date.

In addition, Community Health Assist Scheme (CHAS), a medical subsidy programme for lower- and middle-income earners will now be extended to all Singaporeans with chronic illnesses regardless of income, although benefits will remain tiered according to income.

CHAS helps subsidise outpatient treatments at private general practitioners and dentists and covers various chronic conditions, including diabetes, hypertension, stroke, asthma, major depression, dementia and rheumatoid arthritis.

PM Lee also announced the addition of polyclinics in Eunos, Sembawang, Kallang and Bukit Panjang by 2020 and in Nee Soon Central and Tampines North by 2023.

Besides the latest initiatives, recall the upgrade of MediShield to MediShield Life and the launch of CareShield Life, which provides financial support for long-term care.

In a Monday report, CGS-CIMB Securities analyst Ngoh Yi Sin says Raffles Medical Group is a potential beneficiary of these new initiatives with healthcare services accounting for 40% of its total revenue.

Raffles Medical will also see capacity expansion in 2018F from both hospital extension and the upcoming opening of Chongqing hospital.

“We reckon the enhanced government subsidies could lift the local patient load for Raffles Medical, posing potential earnings upside to our FY19-20F forecasts,” says Ngoh who has a “hold” call given Raffles Medical’s near-term overseas gestation costs.

As for Health Management International, CGS-CIMB has an “add” with a target price of 80 cents.

“We believe HMI is well positioned to benefit from growing medical tourism in Malaysia given its two established hospitals there,” says Ngoh, adding faster ramp-up of its StarMed acquisition in Singapore is a key catalyst.

Lastly, CGS-CIMB has an “add” for IHH Healthcare with target price of RM6.86 ($2.29).

“A leading private healthcare provider with a diversified presence, IHH continues to add capacity in its key existing and new markets. Potential catalysts include improving earnings from Gleneagles Hong Kong,” says Ngoh.

As at 12.31pm, shares in Raffles Medical, HMI and IHH are trading at $1.06, 59 cents and $1.83 respectively.