Raffles Medical Grp

Raffles Medical Grp: Announced a steady set of 2Q13 results which was in-line with estimates. Net profit for the quarter at $14.5m (+16% y/y, +7% q/q), bringing 1H13 net profit to $27.9m (+16%) which was in tandem with a 13% y/y and 7% q/q rise in revenue during the quarter to $86.8m. Top line revenue was led by a strong showing from the group’s Hospital Services (+16.8%) and Healthcare Services (+6.5%) segments, while more specialist consultants recruited and higher patient acuity expanded the depth and breadth of medical services provided by the group, which aided to the better performance. Going forward, with additional beds of new public and private hospitals coming on-stream in S’pore and the region, Raffles Medical cautions of a competitive landscape within the industry. Together with a more measured pace of economic growth in China and S’pore, this could result in a dampening effect on healthcare demand. Barring any unforeseen circumstances, the group is however optimistic that it will continue to grow for the rest of FY13, and has announced dividends of 1c per share, which will be payable on 29th Aug13. Overall, we note that the group’s fundamentals remain solid, with a net-cash position of $122.4m (22c per share), and at current price the group trades at 25.3x ex-cash forward P/E with an ~1.5% dividend yield, versus larger peer IHH Healthcare of 46.0x forward P/E.