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SINGAPORE: Shares of Thomson Medical Group jumped almost 40 per cent on Tuesday (Aug 26), lifted by news of an RM18 billion (US$4.3 billion) mega project in Malaysia’s Johor. 

The Singapore-listed healthcare company’s shares opened at S$0.065, up from S$0.049 at the previous closing. It climbed to an intra-day high of S$0.068 in early trade.

The stock later pared gains to close at S$0.060.

Mr Eric Ong, an analyst at Maybank Securities, said Thomson Medical Group’s share price had exceeded the stockbroker’s previous target price of S$0.047. 

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“However, our forecasts and valuation do not include Thomson Medical Group’s projected gross development value of over RM18 billion for the whole mega project,” he said. 

While the healthcare company's shares have upside potential, this would be in the longer term as the project's completion and its subsequent earnings contribution would probably take a few years, added Mr Ong. 

Thomson Medical Group announced the launch of Johor Bay on Monday, stating that it would be one of the largest of its kind in Southeast Asia. 

Located within the Johor-Singapore Special Economic Zone, it will include Thomson Hospital Iskandariah, specialist suites, aged care facilities and a life sciences tower for medical research.

Besides the medical facilities, the 10.52ha development will also have luxury residences, a five-star hotel, and commercial-lifestyle precincts catering to regional tourism and medical travellers. 

It will be located 1.2km away from the upcoming RTS station at Bukit Chagar and minutes away from the Causeway and regional ferry terminals, said the group. 

While Thomson Medical Group has not provided a complete timeline for the project's completion, Mr Ong highlighted its first phase of development as a critical milestone for investors to track. 

The phase will kick off with the private Thomson Hospital Iskandariah and a 47-storey luxury residential tower with 180 units. 

It is expected to generate a total estimated gross development value exceeding RM3.1 billion, said Mr Ong.

Thomson Medical Group has also said the first phase is projected to generate more than 1,200 direct and indirect jobs during its construction and operational phase.

Mr Paul Chew, head of research at Phillip Securities Research, said investors should also track the project's participating partners and the take-up rates of the first residential launch. 

"Another will be the implied value of the land if Thomson injects it as equity for any joint venture or land disposals," he added. 

He described the project as "iconic" and believes it will "gain support from all stakeholders".