Raffles Medical (RFMD SP) BUY (Maintained)
FY 15 results: Results in line. Look forward to better momentum ahead
Analyst: Andrew Chow Tel: (65) 6590 6633
| Company | Share price(S$) | Recommendation | Our Target Price(S$) | Within Expectation (Y/N) | EPS FY15 (sen) | FY15 EPS yoy (%) | Highlights of Results |
| Raffles Med | 4.17 | Buy | 5.05 | In line | 12.15 | 1% | See attached comments |
RFMD SP FY15
- Earnings within expectations. No surprises as its FY15 net profit of S$69.3m (+2.4% yoy) was within our (S$68.9m) and market expectations. A final DPS was of 4.5 cents/share was announced, bringing the total DPS for FY15 to 6.0 cents, which is 9.1% higher than FY14's total DPS of 5.5 cents.
- Slip in operating margin on higher staff. Operating margins slipped 1.8ppt to 19.6%, primarily due to a 12% yoy rise in staff costs, that outpaced revenue growth of 9.6% yoy. This is attributable to new hirings ahead of new expanded operations for its existing hospital and Raffles Medical Orchard. Looking ahead, we think staff costs will remain elevated ahead of the new wing expansion at its flagship hospital. The higher staff costs were also due to newly acquired subsidiaries in FY15. Other key costs such as inventory and contractedf services were well contained.
- Solid cash balance. As at Dec 2016, its net cash balance is S$53.8m (S$0.09/share). Operating cashflows remain strong at S$73m in FY15.
- Capacity for growth; BUY. We maintain BUY with a DCF based target price of S$5.05. Our forecasts is pending an analyst briefing this morning. We forecast FY16F EPS growth to pick up momentum as newly completed medical centres (Raffles Medical Orchard and its new facility at Holland V) and clinics contribute. Also, we see a moderate recovery in volume of foreign patients to underpin growth in its hospitals admission.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
