UOBKayhian on 28 Apr 2015
FY15F PE (x): 13.1
FY16F PE (x): 15.4
Muted 1Q15. Raffles Medical’s (RMG) 1Q15 net profit of S$15m (+3% yoy) came in 2%
Major Shareholders below our expectation. While 1Q15 net profit accounted for only
20% of our full-year estimate, we expect a seasonally stronger 2H to lift earnings closer
to our estimates. The muted earnings growth was due to a 1.1ppt decline in operating
margin to 18.6% as the growth in staff costs (+15% yoy) outpaced revenue growth of
9% due to new hirings (121 new staff, of which 33 are doctors) ahead of its expansion
plans (new medical centres at Shaw Centre and Raffles Holland V), and additional
bonus to nurses in 1Q15 (to match the bonus for public-sector nurses).
Our preferred healthcare pick in Singapore. Maintain HOLD and DCF-based target price
of S$4.30. At our target price, the implied 2016F PE is 27.9x. This is close to +1SD to
mean PE of 29.0x but we think this is deserved owing to its strong cash flow generation
and a resilient business model. Also, 2015-17F ROE of 13.2-15.0% are also higher than
its long-term average ROE of 11.6% (1997-2014). Entry price is S$3.80.
No comments:
Post a Comment