Brokers' take

Health Management International | Buy

Target price: S$0.60

Sept 14 close: S$0.53

KGI Fraser Securities, Sept 14

We initiate coverage on Health Management International with a "buy" recommendation and a target price of S$0.60, based on a discounted cash flow valuation (weighted average cost of capital 8.0 per cent, terminal growth rate 3 per cent). We expect profit after tax and minority interests to grow at 21 per cent compounded annual growth rate (CAGR) in the next three years (versus 38 per cent CAGR from FY14-16), underpinned by growing medical tourism. Our target price is an implied 42 times/36 times/31 times FY17/FY18/FY19 forecast and is a slight premium to peers' average of 39 times forward price-earnings ratio. We …