Raffles Medical Group’s (RMG) 2Q13 revenue of S$86.8m (+12.9% YoY; +7.1% QoQ) and PATMI of S$14.4m (+15.9% YoY; +6.8% QoQ) were within our expectations. Topline growth was driven by both its Hospital Services and Healthcare Services divisions, which increased 16.8% and 6.5% YoY, respectively. As expected, an interim dividend of 1 S cent/share was declared, similar to 1H12. Management is currently evaluating the bids for its commercial property and will make a decision on the sale in the coming weeks. Looking ahead, we expect further operating leverage improvement by RMG as management will continue to grow its revenue, underpinned by the expansion of its specialist services. We retain our projections, and reiterate our BUY rating and S$3.42 fair value estimate on RMG, pegged to 29x blended FY13/14F EPS.
2Q13 results in-line with our expectations
Raffles Medical Group (RMG) reported its 2Q13 results which were within our expectations. Revenue rose 12.9% YoY and 7.1% QoQ to S$86.8m. PATMI was up 15.9% YoY and 6.8% QoQ to S$14.4m. Growth during the quarter was driven by higher patient acuity and an increased depth and breadth of medical services on offer. Both of RMG’s core divisions contributed to its topline increase, with its Hospital Services and Healthcare Services segments growing 16.8% and 6.5% YoY, respectively. The former was driven by a healthy high-teens foreign patient volume growth. For 1H13, revenue increased 12.1% to S$167.9m, forming 48.3% of our full-year estimates; while PATMI jumped 16.0% to S$27.9m, or 45.9% of our FY13 forecast. This is unsurprising, as 2H is seasonally a much stronger half for RMG, and we expect this trend to be maintained this year. An interim dividend of 1 S cent/share was declared (payable on 29 Aug 2013), similar to 1H12 and our forecast.
Evaluating commercial property bids
The tender process for RMG’s commercial podium property at 30 Bideford Road closed on 15 Jul. Management is currently evaluating the bids and will make a decision on the sale in the coming weeks. No further details were provided on this during the analyst briefing.
Expect continued operating leverage; reiterate BUY
Looking ahead, we expect further operating leverage improvement by RMG as management will continue to grow its revenue (both volume and price increases). This would be driven by an unrelenting approach towards the expansion of its specialist services. For example, the group recently opened a new specialist outpatient centre (Raffles Diabetes & Endocrine Centre) in Jun this year. It also expanded its Raffles Neuroscience Centre to include specialists in neurosurgery and interventional neuroradiology. We retain our projections, and reiterate our BUY rating and S$3.42 fair value estimate on RMG, pegged to 29x blended FY13/14F EPS. RMG’s share price has recovered 6.1% since we upgraded it to a ‘Buy’ on 18 Jun 2013, outperforming the STI’s 1.6% gain during the same period.
Raffles Medical Group (RMG) reported its 2Q13 results which were within our expectations. Revenue rose 12.9% YoY and 7.1% QoQ to S$86.8m. PATMI was up 15.9% YoY and 6.8% QoQ to S$14.4m. Growth during the quarter was driven by higher patient acuity and an increased depth and breadth of medical services on offer. Both of RMG’s core divisions contributed to its topline increase, with its Hospital Services and Healthcare Services segments growing 16.8% and 6.5% YoY, respectively. The former was driven by a healthy high-teens foreign patient volume growth. For 1H13, revenue increased 12.1% to S$167.9m, forming 48.3% of our full-year estimates; while PATMI jumped 16.0% to S$27.9m, or 45.9% of our FY13 forecast. This is unsurprising, as 2H is seasonally a much stronger half for RMG, and we expect this trend to be maintained this year. An interim dividend of 1 S cent/share was declared (payable on 29 Aug 2013), similar to 1H12 and our forecast.
Evaluating commercial property bids
The tender process for RMG’s commercial podium property at 30 Bideford Road closed on 15 Jul. Management is currently evaluating the bids and will make a decision on the sale in the coming weeks. No further details were provided on this during the analyst briefing.
Expect continued operating leverage; reiterate BUY
Looking ahead, we expect further operating leverage improvement by RMG as management will continue to grow its revenue (both volume and price increases). This would be driven by an unrelenting approach towards the expansion of its specialist services. For example, the group recently opened a new specialist outpatient centre (Raffles Diabetes & Endocrine Centre) in Jun this year. It also expanded its Raffles Neuroscience Centre to include specialists in neurosurgery and interventional neuroradiology. We retain our projections, and reiterate our BUY rating and S$3.42 fair value estimate on RMG, pegged to 29x blended FY13/14F EPS. RMG’s share price has recovered 6.1% since we upgraded it to a ‘Buy’ on 18 Jun 2013, outperforming the STI’s 1.6% gain during the same period.
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