UOBKayhian on 30 Jul 2014
FY14F PE (x): 29.5
FY15F PE (x): 25.1
In line; solid healthcare mitigates hospital weakness. Raffles Medical’s (RMG) 1H14 net
profit of S$30.2m (+8% yoy) came in within our expectations. Although net profits
accounted for only 41% of our full-year estimate, we forecast a seasonally stronger 2H
to lift earnings closer to our full-year estimate. An interim dividend of 1.5 S cents/share
(vs 1.0 S cent/share in 1H13) was announced, which was higher than our estimates.
Core healthcare holding in Singapore. RMG remains on our BUY list with a DCF- based
target price of S$4.30, implying 27x 2015F PE. This is close to its +1SD to mean PE of
28.6x but we think this is warranted given its strong cash flow generation and resilient
business model. Also, 2014-16F ROE of 15.1-16.1% are also higher than its long-term
average ROE of 11.0% (1997-2012).
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