Broker's take: UOB Kay Hian starts coverage on SMG with 'buy' call

ANALYSTS from UOB Kay Hian said Singapore Medical Goup (SMG) will "reap the fruits of acute deals made in prior years" as they initiated coverage on the stock with a "buy" call and a target price of S$0.83, a 31 per cent upside on its last closing price of S$0.63.

The analysts said SMG was the largest healthcare player catering to the premium market segment in Singapore and cited its ability to retain its clientele while targeting merger and acquisition (M&A) deals in medical technology and expanding the company's already broad range of medical expertise as reasons behind its call.

With 27 clinics in Singapore and a regional presence across Indonesia and Vietnam, SMG is a "one-stop platform and lifelong partner that has the ability to retain this niche segment", the analysts said.

The group's earnings-accretive acquisitions at undemanding valuations "should give investors comfort that barring exceptional circumstances, management will be prudent in making future acquisitions," they added.

UOB also highlighted that medical practitioners at SMG were well incentivised and aligned with shareholder interest, which they believe will help the company to expand aggressively, while keeping minority shareholders interests at heart.

SMG shares were trading flat at S$0.63 as at 10.44am on Friday.