Raffles Medical Group’s FY14 revenue was up 9.9% to S$374.6m, meeting the street’s expectations. Adjusting for one-off items, core PATMI at S$64.6m was up 6.7% but fell short of consensus by 5%. The group declared a final dividend of 4 S-cents/share, bringing total dividend to 5.5 S-cents/share (FY13: 5 S-cents/share). We think the group will likely receive a boost to top-line growth from the Emergency Care Collaboration with the Ministry of Health as well as its Holland Village project that is slated to open in 1Q16. Following a change in analyst coverage, we cut our FY15 EPS forecast slightly by 1.2%, mostly in consideration of higher expected expenses in relation to the group’s growing insurance business. This brings our fair value estimate a tad lower from S$3.95 to S$3.91 as we keep our target peg of 30x FY15F EPS unchanged. Maintain HOLD.
Core PATMI was up 6.7% for FY14
Raffles Medical Group’s FY14 revenue was up 9.9% to S$374.6m, meeting the street’s expectations. This was driven by higher revenue in the healthcare services segment and hospital services of 12.4% and 8.8% respectively. The group continued to add new specialists in 4Q14 to enhance the group’s services. Foreign patient growth also remained steady with more patients coming from emerging markets like Vietnam and Myanmar albeit fewer were from Russia and Indonesia possibly due to macro-led factors such as home currency depreciation. Effective tax rate was noticeably higher at 17% for the year following the group’s full utilization of their Productivity and Innovation Credit benefits. Management is hopeful that this scheme will be extended and lower rates could return going forward. Excluding a one-off gain of S$20.4m from the disposal of a subsidiary in FY13 as well as adjustments in fair value of investment properties, the group attained an estimated 6.7% increase in core PATMI to S$64.6m, falling short of consensus by 5%.
Topline growth likely to get boost
From 3Q15 onwards, the Emergency Care Collaboration (ECC) with the Ministry of Health will see the hospital’s Emergency Department begin to receive subsidized patients from SCDF’s emergency ambulances. Management emphasized the implication of this scheme coupled with the provision of government healthcare subsidies, citing a plausible shift of more patients from public to private hospitals in the coming years. Moreover, its Raffles Holland Village project is slated to open in 1Q16, whereby the group will gain revenue from its own healthcare services and rental income from tenants.
Maintain HOLD
The group declared a final dividend of 4 S-cents/share, bringing total dividend to 5.5 S-cents/share (FY13: 5 S-cents/share). Following a change in analyst coverage, we cut our FY15 EPS forecast slightly by 1.2%, mostly in consideration of higher expected expenses in relation to the group’s growing insurance business. Our fair value estimate is now a tad lower at S$3.91 from S$3.95 previously while we keep our target peg of 30x FY15F EPS. Maintain HOLD.
Raffles Medical Group’s FY14 revenue was up 9.9% to S$374.6m, meeting the street’s expectations. This was driven by higher revenue in the healthcare services segment and hospital services of 12.4% and 8.8% respectively. The group continued to add new specialists in 4Q14 to enhance the group’s services. Foreign patient growth also remained steady with more patients coming from emerging markets like Vietnam and Myanmar albeit fewer were from Russia and Indonesia possibly due to macro-led factors such as home currency depreciation. Effective tax rate was noticeably higher at 17% for the year following the group’s full utilization of their Productivity and Innovation Credit benefits. Management is hopeful that this scheme will be extended and lower rates could return going forward. Excluding a one-off gain of S$20.4m from the disposal of a subsidiary in FY13 as well as adjustments in fair value of investment properties, the group attained an estimated 6.7% increase in core PATMI to S$64.6m, falling short of consensus by 5%.
Topline growth likely to get boost
From 3Q15 onwards, the Emergency Care Collaboration (ECC) with the Ministry of Health will see the hospital’s Emergency Department begin to receive subsidized patients from SCDF’s emergency ambulances. Management emphasized the implication of this scheme coupled with the provision of government healthcare subsidies, citing a plausible shift of more patients from public to private hospitals in the coming years. Moreover, its Raffles Holland Village project is slated to open in 1Q16, whereby the group will gain revenue from its own healthcare services and rental income from tenants.
Maintain HOLD
The group declared a final dividend of 4 S-cents/share, bringing total dividend to 5.5 S-cents/share (FY13: 5 S-cents/share). Following a change in analyst coverage, we cut our FY15 EPS forecast slightly by 1.2%, mostly in consideration of higher expected expenses in relation to the group’s growing insurance business. Our fair value estimate is now a tad lower at S$3.91 from S$3.95 previously while we keep our target peg of 30x FY15F EPS. Maintain HOLD.
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