SINGAPORE (Aug 26): OCBC Investment Research has maintained its “hold” recommendation for Raffles Medical Group with a fair value of S$1.54, after taking into account the near-term cost pressures seen in its 2Q results.

However, OCBC’s analyst Jodie Foo continues to be positive on the group, noting that the group’s long-term growth potential remains robust as Singapore continues to grow as a hub for medical tourists.

For instance, Raffles Medical’s diversified international patients mix means that the impact of lower volumes of patients coming from Indonesia, would be mitigated by the higher volumes of patients from other countries like China and Indochina.

“In addition, these patients continue to seek critical care, which ensures revenue intensity to an extent,” writes Foo in a note on Friday.

Foo also points out that Raffles Medical’s overseas operations are an important boost to the group’s long term growth, as Singapore’s public healthcare standards continue to catch up with the private sector.

Raffles Medical’s clinics operating under International SOS and its subsidiaries have been doing well in Cambodia and Vietnam, while its Shanghai hospital project remains on schedule to open by 2018. “Execution remains a key factor to success in China, and we believe

Raffles Medical’s management strength gives some assurance to this project,” adds Foo.

That said, in light of the group’s share price fluctuations in recent weeks, Foo advises long term investors to accumulate the stock below S$1.48.

Shares of Raffles Medical are trading at S$1.51.