Brokers' take: Singapore healthcare plays still in the pink amid reopenings, says Maybank KE

MAYBANK Kim Eng (MKE) has maintained its "buy" calls on Singapore healthcare plays such as Raffles Medical BSL and Q&M Dental Group QC7 a : QC7 0%s Singapore and Malaysia look to reopen their borders.

Thomson Medical A50 : A50 0%, which is not rated but derives a quarter of its revenue from Malaysia, has also been highlighted as a potential beneficiary from the further reopenings.

MKE said in a report on Wednesday (Oct 13) that Raffles Medical has the most levers to benefit from reopening as the sole provider of polymerase chain reaction tests for Vaccinated Travel Lanes (VTLs).

The nine more incoming VTLs and the Singapore government rolling out booster shots may imply more resilient vaccination revenue than originally expected, MKE said.

It has raised its estimates for FY2021 to FY2023 by 2-8 per cent, among other tweaks to the model. Its target price for Raffles Medical stands at S$1.68, implying an upside of 9.1 per cent from Raffles Medical’s Thursday closing price of S$1.54. The counter finished 0.7 per cent or S$0.01 higher on the day.

On Monday (Oct 11), RHB raised its target price on Raffles Medical to S$1.65 from S$1.45 and maintained its "buy" call. It also pinpointed the healthcare provider as a beneficiary of the VTLs.

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For Q&M, MKE believes there is room for foreign patient load growth. It has left its target price and earnings per share estimates intact for now due to Q&M's "robust core dental business" - of which foreign patients account for less than 5 per cent.

Rising Covid-19 cases should still support Q&M's testing revenue in the near term, the research team said. MKE’s target price for the counter is S$0.85, implying a 45.2 per cent upside from Q&M’s Thursday closing price of S$0.585. Q&M’s shares rose 1.7 per cent or S$0.01 for the day.

Meanwhile, Thomson Medical derives about 75 per cent of its revenue from Singapore, with the balance from Malaysia. Thus, easing restrictions should bring in a higher patient load in key services such as obstetrics, gynaecology and paediatrics.

READ MORE:

• Brokers' take: Raffles Medical to benefit from further border reopening, RHB says
• Brokers' take: DBS expects Q&M to gain from Covid-19 turning endemic; raises target price to S$1
• Singapore expands Vaccinated Travel Lanes to 11 countries including US, UK
• VTL with 9 more countries: What's the Covid situation there?