Raffles Medical Group

Raffles Medical Group released 3Q13 results which were largely in line. Net profit at $13.9m (+10% y/y, -4% q/q), in tandem with revenue which came in at $85.1m (+8% y/y, -2% q/q). The result brings the group’s 9M13 net profit to $41.7m (+14%) For the quarter, revenue from Hospital Services and Healthcare Services divisions increased by 9.4% and 5.7% respectively facilitated by increased patient load, while operating profit came in at $16.8 (+11%) on back of improved operating efficiencies. Going forward, RafflesHospital continues to see strong demand for all its hospital services, which is expected to contribute positively to the Group’s performance. The Group is also working with the relevant Government authorities on the extension of the Raffles Hospital premises at North Bridge Road. RafflesMedical clinics saw an improved performance with new corporate clientele, and the stronger performance is expected to carry through into the final quarter of 2013, with new branches opening in major shopping and population regions and continued growth in corporate sales. Going forward, the group guides that with new public and private hospitals being developed in Singapore and the region, the healthcare landscape will remain competitive. The more measured pace of economic growth in China and Singapore may have a dampening effect on healthcare demand. Barring any unforeseen circumstances, the Group is optimistic that it will continue to grow for the rest of the year. At current price the group seats on a net cash position of $146.1m, representing 26.8¢ per share, and trades at 30x ex-cash annualized P/E.