Raffles Medical tie-up with CTIG will boost China outlook: UOB KayHian

China yuan coins

Raffles Medical Group’s tie-up with China Taiping Insurance Group, or CTIG, is a positive move that’s set to drive patient load and extend the Singapore-based company’s reach in China, UOB KayHian said in a note on Tuesday.

On Monday, RMG said it signed a memorandum of understanding with CTIG to jointly provide medical and healthcare services and healthcare management services and to explore health-related real-estate opportunities.

Under the MOU, CTIG will be able to appoint RMG as its preferred network of medical providers for its insured members, both individual and corporate, as well as staff and their dependents, the filing to SGX on Monday said, adding the potential real-estate opportunities would include medical facilities, elderly homes and retirement villages in China.

UOB KayHian said the deal will give RMG the advantage of a local Chinese partner with strong experience as its a top-five insurance player on the mainland. It noted CTIG has a strong presence in Sichuan province, while its Chongqing operations were also extensive.

“By collaborating on healthcare insurance products, RMG can leverage on its expertise in implementing Singapore healthcare insurance to provide exclusive products for CTIG customers,” the brokerage said.

“We see potential offerings in services such as insurance product design, underwriting and claims administration, which are areas RMG has
experience in. In addition, RMG’s medical facilities and its panel of medical professionals shall be CTIG’s preferred network of medical providers,” the brokerage said. “We believe these initiatives are strategic in nature, aiding to develop RMG’s patient load for its Chongqing
and Shanghai hospitals.”

UOB KayHian said it hasn’t yet factored the MOU into its estimates, noting it’s not binding at this stage, but it added that a successful execution would raise earnings.

It kept its estimate for RMG’s China hospitals to post a S$5 million to S$10 million loss on an earnings before interest, taxes, depreciation and amortization (ebitda) basis in their first and second year of operations, with a gradual recovery after ramp up.

It kept a Buy call with S$1.28 target price on the share.

The share was down 0.90 percent at s$110 at 11:00 A.M. SGT.



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