RAFFLES MEDICAL GROUP
PRICE - $1.26
TARGET - $1.65
The government has unveiled the parameters for means testing, which will be implemented in all public hospitals in Jan 09. Means testing is expected to reduce subsidies for the bulk of middle-income Singaporeans and permanent residents in public hospitals.

With two-thirds of Raffles Medical Group’s (RFMD) patients being Singapore residents, compared to Parkway’s 40%, we expect RFMD to be a greater beneficiary, as more middle-income patients seek private healthcare now that the cost differential between private and public healthcare for this group has narrowed. We do not anticipate significant capex outlay this year beyond maintenance capex and possible overseas expansion into China via a medical centre, which is likely to be funded by internal cash and debt. Our target price falls to $1.65, still based on 22.5x CY09 P/E, or a 10% discount to our 25x target for Parkway’s core healthcare operations. Maintain OUTPERFORM.
– CIMB-GK (07 Apr)

SINGTEL
PRICE - $3.98
TARGET - $4.20
SingTel has been outperforming Bharti over the last 3 mths & the implied PE ex-associates is now ~15x FY09E. Stub valuations (Optus & Singapore) are no longer cheap but our continued positive outlook on associates (esp. Bharti), and the potential for a special dividend from SingTel should drive further outperformance. Prospects for a special dividend with the full year (FY08) results announcement remain good as new investments that meet SingTel’s criteria have yet to emerge. Recently, the Australian government terminated its contract with OPEL (an Optus joint venture). Pending funding & determination of wholesale pricing, our forecasts did not capture this contract, & are hence unaffected by the cancellation. On a LT basis loss of OPEL implies greater reliance on 3G to compete vs Telstra. Over the past 12 mths, the S$ has been strong vs currencies of its associate investments, esp. the Indian Rupee. Factoring this, we have tweaked our FY08-10 EBITDA & NPAT forecasts by c.1-1.5% p.a. BUY.
– Merrill Lynch (07 Apr)

JURONG TECHNOLOGIESINDUSTRIAL CORP
PRICE - $0.295
TARGET - $0.40
We caught up with Jurong Technology (JTL) recently for an update. Not surprisingly, business in 1Q08 has been slow with some excess capacity in China, in part due to seasonality for its ULC (Ultra Low Cost) handsets as well as lower orders from major customer Motorola (MOTO). MOTO has also recently announced that it intends to reduce its operations in Singapore, but management assured us that JTL’s business extends beyond Singapore i.e. manufacturing is mostly done in Brazil, China and Malaysia. We are paring our revenue estimates for FY08 by 24% and FY09 by 23%. However, our earnings forecasts are reduced by a smaller 18.2% and 1.4% respectively, buffered by its higher margin ULC business. Retain BUY.
– OCBC Investment (08 Apr)

RAFFLES EDUCATION CORP
PRICE - $1.14
TARGET - $1.75
Raffles Education (RLS) recent acquisition of Wanbo Education Management (Wanbo) raises our earnings by 2-3% through FY09-10E, and more importantly, reinforces our view that its acquisition deal pipeline continues to remain strong. We understand that Wanbo is similar to the Shanghai Zhongfa deal sealed nine months ago, both in terms of operating and profitability metrics, with net margins at 50%, which are slightly better than RLS’ organic business. At our conference in HK last week, management met with more than 35 investors, and discussed its recent acquisition transactions, its growth strategy in India and Vietnam, as well as progress on the Oriental University City transaction, whose scale makes execution the key risk to our forecasts in the medium term. RLS remains in its own league on scale, growth and profitability. Maintain OUTPERFORM.
– Credit Suisse (08 Apr)