• Shaw Centre clinic on track to open by Jun-15, Eastpoint Mall clinic opens today
• Falling reliance on Indonesian patients, possibly due to weakening IDR
• Reiterate Accumulate with unchanged TP of S$4.49.

Analyst briefing key takeaways

Shaw Centre to open by Jun-15 – Management shared that renovation works at Shaw Centre clinic is on track. It would officially open the 17,000 sqf facility by Jun-15. It has begun receiving patients. We expect revenue contributions from 3QFY15 onwards. RMG also opened a clinic in Eastpoint Mall today. Construction works for its Holland Village clinic is on schedule as well.

Falling reliance on Indonesia – Management shared that the number of patients from Indonesia have remained stable while other nations have increased. We think this is due to the weakening Indonesian Rupiah. Also, Russian patient numbers have not been strong in 1QFY15, the typical strong quarter. We think falling oil prices and softening Ruble have contributed to the drop.

S$200 mn in expansionary capex expected for next 2.5 years – This is meant for RMG’s property in Holland Village and extension plans in Bugis. The total capex for the two projects is S$430 mn. RMG has S$120.9 mn in cash. With only S$6.7 mn in loans, we think RMG has sufficient debt headroom for its capex needs.

How do we view this?

We are positive on the pipeline of new clinics opening over the next two years backed by a healthy balance sheet. The emergency care collaboration with the Singapore Civil Defence Force starting in Jun-15 could be a potential catalyst as well.

Investment Actions

We maintain our Accumulate rating with an unchanged TP of S$4.49.

Source: Phillip Securities Research - 28 Apr 2015