In a recent news article citing findings by AB Bernstein and medical facilitation travel Global Health and Travel, Singapore was noted to retain its position as one of the top destinations in the region for medical tourism. However, the attractiveness of the “patient experience” in neighbouring countries like Malaysia and Indonesia has improved between 2015 and this year, according to the study.

In addition, we believe that certain hospitals such as Health Management International (HMI)’s in Malaysia offer quality treatment at relatively lower costs than Singapore. Thus, given constant concerns over medical tourism and longer term implications for Singapore, we are positive on Raffles Medical Group (RMG)’s expansion plans to diversify their presence and sustain earnings for the long term, although we are cognizant of start-up costs and execution in the nearer term.

Within the sector, we have a buy rating on both HMI [BUY, FV S$0.80] and RMG [BUY, FV S$1.60] – the former for their presence and growth plans in Malacca and Johor to maintain a healthy growth momentum.

Source: OCBC Research - 8 Jun 2017