Keppel Corporation ($7.29, up 7 cents) announces that it has, through a wholly-owned subsidiary (Keppel Land), entered into an agreement to acquire a new senior living facility with a total floor area of 19,846 sm in Qixia District, Nanjing from China Overseas Land & Investment Limited (China Overseas). To be fitted out and operated by Keppel Land China, it is envisaged to be a premiere assisted-living community with care capabilities and around 400 beds when open in 2H 2023.
Separately, Keppel Land also signed two Memoranda of Understanding (MOUs) at the 16th Singapore-Jiangsu Cooperation Council meeting held on the same date, to advance the company’s expansion in Nanjing. Under the first MOU, Keppel Land will collaborate with the People’s Government of Qixia District to provide high-quality senior care services in the district, including but not limited to assisted living, community support and home care services. Under the second MOU, Keppel Land China and China Overseas (Nanjing) will cooperate in areas spanning urban renewal, senior living as well as asset development, operation and management in the city.
We continue to favour Keppel Corporation’s pivot to sustainable urban solutions and this latest move into the senior living segment is another positive step in that direction. Keppel Corporation’s market cap stand at S$12.77 bln and currently trades at 13x Forward PE and 1.1x P/B with a dividend yield of 4.9%. Consensus target price stands at S$9.18, representing 26% upside from current share price.
SingTel (S$2.56, unchanged) announced that it had entered into a strategic partnership with Indonesia’s largest telco Telkom, and Indonesian energy company Medco Power for its first data centre project in Indonesia. This is the third market for Singtel as it advances its regional data centre strategy to address digital infrastructure demand critical to ASEAN’s growth.
At $2.56, market cap of SingTel is S$42,227.2mln, FY23F P/E is 16.9x, current P/B is 1.5x and FY23F dividend yield is 5.9%. For FY23F, we are maintaining our forecasts for SingTel grow its underlying net profit by 11.8% yoy to S$2,150mln and net earnings to appreciate by 28.3% yoy to S$2,500mln.
As we continue to like SingTel for its defensive attributes and attractive dividend yield, we are thus maintaining our ACCUMULATE recommendation for the stock.
Raffles Medical Group Ltd (RFMD SP):
Increasing healthcare demand .
- Surge in Covid cases. With China easing its Covid restrictions and Covid cases surging in China, Raffles Medical will benefit from this as their medical facilities will be visited by Chinese residents. Raffles Medical has a total of 3 hospitals and 4 clinics located around China. Additionally, they have 3 online stores serving 3 districts in China.
- Increase in tourism. With worldwide borders being opened up, the pent-up demand for travel is finally being satisfied. With an influx of tourist into Singapore, healthcare providers are expecting a wave of travellers requiring pre-departure PCR test in the coming months. With a 15 – 20% increase in PCR demand in the month of november, these numbers are expected to rise even higher as measures are continually relaxed.
- Rise in demand for services. Singapore is currently facing a surge in foreign demand in the healthcare sector, with many foreigners opting for treatment in Singapore. As Singapore opens up its borders, foreign patients return to seek treatment at RafflesHospital. Singapore residents who postponed their elective surgeries also returned for treatment.
- 3Q22 results. Raffles Medical reported strong 3Q results ended in September, with a net profit growth of S$98.2 million, up 57.3% YoY. For the period, revenue grew 6.5% YoY to S$199.5 million while net profit surged by 62.1% YoY to S$38.3 million.
- Updated market consensus of the EPS growth in FY22/23 is 29.4%/-8.0% YoY respectively, which translates to 24.0x/26.2x forward PE. Current PER is 24.8x. Bloomberg consensus average 12-month target price is S$1.61.
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