Raffles Medical

Raffles Medical: 3Q12 results, broadly in line. Revenue at $78.7m, +14% yoy, supported by strong revenue growth in Healthcare Services and Hospital Services. Net profit at $12.6m, +7% yoy, largely due to Operating margin falling from 21.3% to 19.2% yoy, as staff costs and services expenses rose industry-wide. Nevertheless Raffles Med highlights that staff currently deployed at the Singapore Prisons will be redeployed in the new year to other parts of the Group as well as to new clinics and services that will be opened in 2013, which could help alleviate its staff costs. Mgt does not expect the conclusion of its Prisons service to have a material impact on the Group. Mgt highlights that with additional beds of new public and private hospitals coming onstream, the healthcare landscape will remain competitive. Adds the slowdown in China’s economic growth may have a dampening effect on healthcare demand from the region. Nevertheless, mgt is optimistic that the Group will continue to grow into 4Q12. At $2.50 last close, the stock trades at 3.7x P/B, 27.6x annualized 9M12 P/E.