Raffles Medical

Raffles Medical: 1Q15 results were at the bottom end of estimates, with net profit inching up 2.8% y/y to $15.1m on revenue of $95.0m (+8.5%).

All divisions contributed positively, with sales from healthcare and hospital services divisions rising 13.7% and 6.2% respectively.

Bottom-line was however weighed by a 15.2% jump in staff costs to $48.3m, due to increased staffing for new and expanded operations at RafflesHospital and upcoming new medical centres at Shaw Centre and Raffles Holland V, as well as additional bonus paid to nurses this quarter.

Balance sheet remains healthy, with net cash of $120.9m.

Going forward, construction for Raffles Hospital Extension is scheduled in 1Q17, and is expected to add an additional 220,000 sf (+73%) to its present 300,000 sf gfa upon completion. Meanwhile, its five-storey commercial building on the site of the former POSB Building in Holland Village is on track to complete in 1Q16.

The group will continue to benefit from the government initiated Community Health Assist Scheme and Pioneer Generation package. The new FlexiMedisave scheme announced by the Government in Jan 2015 should also contribute positively to the group.

Raffles Medical is valued at 30x forward P/E and 4.1x P/B.