RafflesMed – CIMB

Confidence not lacking

FY11 results were a non-event. Management’s confidence was evident in its strong dividend commitment amid expansion. Property decanting is in play.

 

FY11 core profit meets consensus and our expectations (99%). We lower FY12-13 by 2% to reflect a maturing landscape, though our target got a lift from higher peer valuations (20x CY13 P/E, previously 22.5x CY12). FY14. EPS has been introduced. Maintain Outperform.

Strong dividend signal

4Q11 core EPS makes up 33% of FY11, a strong quarter. FY11 growth was powered by all divisions (Healthcare Services +10.9% yoy; Hospital +14.6% yoy). Hospital growth was spurred by volume (+5%), prices and the number of intensity cases (+9%). A final dividend of 3cts has been declared. Adding in its interim dividend of 1ct, FY11 DPS will be 4cts (FY10 3.5cts). We read this as a strong vote of management’s confidence in the health of its businesses and cash flows, despite capex commitments.

Properties at play

Planning and preparatory work for its Raffles Hospital (RH) expansion and Specialist Medical Centre is underway. In Jan 12, the group had decanted 15k sf of space (admin/backroom) in RH for conversion into healthcare dollar-churning businesses, contributing from 2Q12 onwards. RFMD also brought 5k sf of space in Samsung Hub in the CBD for use as a medical centre. Rental revenue from its two Orchard and CBD properties amounted to S$10.5m in FY12 (S$7.9m in FY11).

New government scheme

We expect RFMD to benefit from recent government initiatives to expand the Community Health Assist Scheme. Catalysts are expected from the addition of clinics/medical specialties, patient growth and intensity cases. We believe management has every reason to look at rate and fee hikes, now that RH’s charges are below market rates.

RafflesMed – CIMB

Confidence not lacking

FY11 results were a non-event. Management’s confidence was evident in its strong dividend commitment amid expansion. Property decanting is in play.

 

FY11 core profit meets consensus and our expectations (99%). We lower FY12-13 by 2% to reflect a maturing landscape, though our target got a lift from higher peer valuations (20x CY13 P/E, previously 22.5x CY12). FY14. EPS has been introduced. Maintain Outperform.

Strong dividend signal

4Q11 core EPS makes up 33% of FY11, a strong quarter. FY11 growth was powered by all divisions (Healthcare Services +10.9% yoy; Hospital +14.6% yoy). Hospital growth was spurred by volume (+5%), prices and the number of intensity cases (+9%). A final dividend of 3cts has been declared. Adding in its interim dividend of 1ct, FY11 DPS will be 4cts (FY10 3.5cts). We read this as a strong vote of management’s confidence in the health of its businesses and cash flows, despite capex commitments.

Properties at play

Planning and preparatory work for its Raffles Hospital (RH) expansion and Specialist Medical Centre is underway. In Jan 12, the group had decanted 15k sf of space (admin/backroom) in RH for conversion into healthcare dollar-churning businesses, contributing from 2Q12 onwards. RFMD also brought 5k sf of space in Samsung Hub in the CBD for use as a medical centre. Rental revenue from its two Orchard and CBD properties amounted to S$10.5m in FY12 (S$7.9m in FY11).

New government scheme

We expect RFMD to benefit from recent government initiatives to expand the Community Health Assist Scheme. Catalysts are expected from the addition of clinics/medical specialties, patient growth and intensity cases. We believe management has every reason to look at rate and fee hikes, now that RH’s charges are below market rates.

Comments are Closed