Higher Medisave withdrawal limits for surgeries. The Singapore government announced that by June, middle-income Singaporeans would be able to use their Medisave accounts to pay for a larger part of their private hospital bills. The withdrawal limit for operations will be raised, in some cases, by as much as 80%. Currently, the withdrawal limits for operations range from S$150 to S$5,000. The new limits will be between S$250 and S$7,550. The higher limits will allow patients who opt for private healthcare, to cut their out-of-pocket expenses.

This would result in patients having more cash on hand, and they may be more willing to pay for additional tests, procedures or elective operations, which they could have initially thought of postponing. This would in turn, contribute to the hospitals’ revenue.

We are maintaining our BUY call on the sector. We currently have BUY calls on Parkway and Thomson Medical. While we like Parkway for its regional exposure, we are currently reviewing our target price for Parkway, as the decline in visitor arrivals in Singapore could have a negative impact on the patient volume at its Singapore operations. Our target price for Thomson Medical remains at S$0.55. We have a NEUTRAL call on Raffles Medical, as we expect slower patient volume growth, given the protracted economic downturn.