Thomson Medical – BT

Thomson Medical jumps on offer report

DMG advises investors to accept offer by Peter Lim

SHARES in Thomson Medical Centre shot up to $1.76 during trading yesterday before finally closing at $1.75 on last week’s news that private investor Peter Lim had launched a general offer for the company.

The closing price of $1.75 per share represents a 62 per cent increase from the previous close.

However, Thomson Medical wasn’t the only healthcare stock that made significant gains following the announcement – shares in Raffles Medical Group hit a high of $2.38 before ending the day’s trading at $2.30, up 12 cents or 5.5 per cent.

It was announced last Friday that Mr Lim is making an offer at $1.75 per share, which values the company at about $513 million. This comes on the heels of Mr Lim’s purchase – via his investment holding company Sasteria – of a 39.34 per cent stake in Thomson Medical, which he bought from Thomson Medical’s founder Cheng Wei Chen and his family.

Other substantial shareholders in Thomson Medical include Harilela (Singapore) Private Limited – which holds about 17.08 per cent – and Kabouter Management, which holds around 5.01 per cent.

The cash offer is conditional on Sasteria acquiring more than 50 per cent of Thomson Medical.

BT understands that where Thomson Medical’s management is concerned, there are no plans for change.

In a report yesterday, DMG & Partners Research advised investors to accept the offer, pointing out that the offer prices the stock at 30x FY11 P/E. It also has a ‘buy’ call on Raffles Medical, with a target price of $2.40.

Mr Lim’s offer for Thomson Medical comes some months after a takeover battle played out for local hospital operator Parkway Holdings, which has 16 hospitals in Asia. In July, Malaysia’s sovereign wealth fund Khazanah Nasional made a $3.5 billion general offer for the shares in Parkway that it did not own, trumping an earlier $3.2 billion offer by India’s Fortis Healthcare. Fortis’ Malvin-der and Shivinder Singh have since gone on to acquire the healthcare businesses of Hong Kong-based Quality Healthcare Asia (QHA) – excluding QHA’s elderly healthcare businesses – for over HK$1.5 billion (S$250 million).

‘The offer price values TMC at about 29.5x consensus FY11 PER, which is almost on par with Parkway Holdings’ valuation when Khazanah launched a full takeover offer for the company in July this year at $3.95/share,’ Kim Eng said in a research report yesterday. ‘Bearing in mind that TMC’s revenue base in 2009 is 15 times smaller than Parkway’s, it seems like Peter Lim does not make a differentiation between the size and business models of the hospitals as long as he gets a piece of the action in the healthcare sector.’

The report went on to point out that Raffles Medical was ‘probably the only reputable private healthcare player left listed now’, though it also highlighted that Parkway Life Real Estate was another way to invest in the healthcare sector.

Thomson Medical – BT

Thomson Medical jumps on offer report

DMG advises investors to accept offer by Peter Lim

SHARES in Thomson Medical Centre shot up to $1.76 during trading yesterday before finally closing at $1.75 on last week’s news that private investor Peter Lim had launched a general offer for the company.

The closing price of $1.75 per share represents a 62 per cent increase from the previous close.

However, Thomson Medical wasn’t the only healthcare stock that made significant gains following the announcement – shares in Raffles Medical Group hit a high of $2.38 before ending the day’s trading at $2.30, up 12 cents or 5.5 per cent.

It was announced last Friday that Mr Lim is making an offer at $1.75 per share, which values the company at about $513 million. This comes on the heels of Mr Lim’s purchase – via his investment holding company Sasteria – of a 39.34 per cent stake in Thomson Medical, which he bought from Thomson Medical’s founder Cheng Wei Chen and his family.

Other substantial shareholders in Thomson Medical include Harilela (Singapore) Private Limited – which holds about 17.08 per cent – and Kabouter Management, which holds around 5.01 per cent.

The cash offer is conditional on Sasteria acquiring more than 50 per cent of Thomson Medical.

BT understands that where Thomson Medical’s management is concerned, there are no plans for change.

In a report yesterday, DMG & Partners Research advised investors to accept the offer, pointing out that the offer prices the stock at 30x FY11 P/E. It also has a ‘buy’ call on Raffles Medical, with a target price of $2.40.

Mr Lim’s offer for Thomson Medical comes some months after a takeover battle played out for local hospital operator Parkway Holdings, which has 16 hospitals in Asia. In July, Malaysia’s sovereign wealth fund Khazanah Nasional made a $3.5 billion general offer for the shares in Parkway that it did not own, trumping an earlier $3.2 billion offer by India’s Fortis Healthcare. Fortis’ Malvin-der and Shivinder Singh have since gone on to acquire the healthcare businesses of Hong Kong-based Quality Healthcare Asia (QHA) – excluding QHA’s elderly healthcare businesses – for over HK$1.5 billion (S$250 million).

‘The offer price values TMC at about 29.5x consensus FY11 PER, which is almost on par with Parkway Holdings’ valuation when Khazanah launched a full takeover offer for the company in July this year at $3.95/share,’ Kim Eng said in a research report yesterday. ‘Bearing in mind that TMC’s revenue base in 2009 is 15 times smaller than Parkway’s, it seems like Peter Lim does not make a differentiation between the size and business models of the hospitals as long as he gets a piece of the action in the healthcare sector.’

The report went on to point out that Raffles Medical was ‘probably the only reputable private healthcare player left listed now’, though it also highlighted that Parkway Life Real Estate was another way to invest in the healthcare sector.

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