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Brokers’ take

This article is more than 12 months old

Compiled by Navin Sregantan

COMFORTDELGRO | BUY

FAIR VALUE: $2.72
OCT 30 CLOSE: $2.22

KGI Securities, Oct 30

ComfortDelGro's share price dropped as much as 6 per cent on heavy volume on Oct 10 following media reports that Indonesia's ride-hailing company, Go-Jek, has decided to enter the Singapore market by itself and will not be partnering ComfortDelGro as was initially expected.

However, we believe the impact on ComfortDelGro's taxi business will not be as severe as during Uber and Grab's fight for market dominance which was simply not sustainable.

As we had mentioned in January in our key investment thesis, ComfortDelGro has strong cash flows to outlast competitors in the transport business given its diversified geographical base.

Therefore, Go-Jek will be more measured in terms of the discounts and incentives to both drivers and customers.

We are of the view that the sell-off is overdone and presents an attractive entry point for a defensive business offering 5 per cent dividend yield, sustained by strong free cash flows from its diversified businesses. We reiterate our "buy" recommendation and maintain our fair value of $2.72, based on 19x 2018 forecasted earnings per share.


RAFFLES MEDICAL GROUP | BUY

FAIR VALUE: $1.26
OCT 30 CLOSE: $1.06

OCBC Investment Research, Oct 30

Raffles Medical's Q3 results were within our expectations.

Topline grew 1.2 per cent year-on-year to $121 million, due largely to an 8 per cent year-on-year revenue increase in the group's healthcare services division.

This was partially offset by the revenue drop in the group's Hospital Services division.

Profit after tax and minority interests grew 0.1 per cent year-on-year to $16.4 million, forming 24.2 per cent of our FY2018 forecast.

We deem this set of results to be broadly within expectations. Management has guided that it has hired approximately 100 staff, which include specialists covering the main practices offered by Raffles Hospital Chongqing (RHC), which will open in Q4.

Staff costs have been contained, but we expect this to start creeping up from Q4.

Earnings before interest, tax, depreciation and amortisation start-up losses for the first two years of operations are still expected to be $8 million to $10 million and $4 million to $5 million respectively.

We believe the street has largely accounted for these, and a key catalyst would be the narrowing of losses for RHC.

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