Raffles Medical: solid growth in the long term?

Raffles Medical: solid growth in the long term?

Brief Background:
Raffles Medical Group is a healthcare company, engaged in the activities relating to the operation of medical clinics and other general medical services. The Company operates in three segments: healthcare services, hospital services and investment holdings.

Key Financial Highlights:
1. Group observed a 15% growth in revenue, from $410.5m to $473.6m during the one-year period. Meanwhile, Raffles medical gained 1.3% rise in net profit to $70.2m, which is mainly distributed from higher patient load from the expanding RafflesMedical clinic network, with higher revenue from the group’s newly acquired International SOS (MC Holdings) and its subsidiaries.

2. However, according to the company, the growth of revenue was offset by higher staff cost, operating expenses and supplies used, especially the recruitment cost for more doctors, specialists, nurses and ancillary staff to cater to the expansion of the existing business operations.

3. The group has a healthy cash position at $111.9 million as of Dec 31, with $78.9 million (70%) from operating activities.

4. Profit attributable to shareholders has a slight increase of 1.3%, and the group announced a final dividend of 1.5 cents, similar to the amount of last year.

5. From the perspective of Cash flow position, Raffles Medical has a rise of 30% in their free cash flow, but which is mainly driven by the reduction of payment for the investment properties under development.

Recent Events:
FY Result Release Date: 20 Feb 2017

Related news:
Raffles Medical’s net profit inches up 1.3% to $70.2m

Raffles Medical Group says FY PATMI S$70.2 million, up 1.3 percent

Raffles Medical’s FY16 earnings rise 1.3% to $70.2 mil on higher revenue

Refer to the FY2016 result here.

Also, stock price is up around 0.7% YTD.

According to the Business Times:

In its outlook, the healthcare provider said: ‘The slower economic growth in Singapore and the region may have a dampening effect on health care demand in general . . . The completion of Raffles Hospital extension planned later this year as well as the group’s expansion to other regional markets in cities where there is strong demand for reliable quality health care will enable the group to enjoy greater synergies brought about by the expanded reach of our outpatient and inpatient services.’ -Raffles Medical Group reports 1.3% rise in FY2016 net profit as costs increase.”
Refer to source here.

Is Raffles Medical really worth holding for the long term?

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