PHILLIP SECURITIES recently visited Thomson Medical Center to obtain updates from Thomson’s management.“We found that Thomson’s fundamentals continue to remain sound,” wrote analyst Zuo Li in a report dated 16 Jan ‘08.
The average number of babies delivered every month at hospitals managed by Thomson (market capitalisation: $181 million) over the past four months has surpassed 700, compared to the average deliveries of 639 in FY07 (ended June 30).
“We believe the growth of child deliveries in Thomson will support well Thomson’s top line and bottom line growth in 2008.”
Thomson’s share price has slid to S$0.62, “which provides a good entry point to buy into this counter.”
Only long- term investors are advised to take a position due to the short term uncertainty of the stock market, wrote Zuo Li.
Phillips maintains its forecast for FY08 and FY09 with net profit $10.5 m and $12.0 m. Net profit margin are expected to be 17.9% and 18.4%, respectively.
Phillips still pegs the PE of the stock at 24x FY07, and arrived at a fair value of 78.5 cents.
”Given that healthcare sector is more defensive during economic downturns, we feel it is worthwhile to consider Thomson during this time. Reiterate Buy,” wrote Zuo Li.
