RafflesMed – OCBC
EXPANDING FOR THE FUTURE
•Results showcase defensive earnings
•Final dividend of 3 S cents declared
•Forecasting margin expansion in FY12
4Q11 results within expectations.
Raffles Medical Group (RMG) reported its 4Q11 results which were within our expectations. Revenue rose 13.9% YoY and 4.6% QoQ to S$72.3m. Net profit increased 10.3% YoY and 39.9% QoQ to S$16.5m. For FY11, revenue of S$272.8m represented a 14.1% increase, and just 0.5% shy of our forecast. Reported PATMI rose 11.3% to S$50.4m. Excluding fair value gains on investment properties of S$2.2m, we estimate that core PATMI rose 14.1% to S$48.2m, forming 99.2% of our earnings projection. A final dividend of 3 S cents was declared, bringing full-year dividends to 4 S cents. This translates into a yield of 1.6% and was higher than FY10’s declared dividends of 3.5 S cents.
Benefiting from robust demand for quality healthcare services
We understand that RMG’s increment in revenue was driven largely by ASP increases, while volume growth contributed to a smaller extent. This improved performance was attributed to growth from its core Hospital Services and Healthcare Services divisions, which saw a double-digit jump in revenue of 14.6% and 10.9%, respectively. The former was driven by higher patient loads and a wider range of medical specialties on offer. Moving forward, we see margin expansion arising from further ASP increases, narrowing losses at its Shanghai medical centre and higher revenue intensity per patient.
Expansion taking place steadily
Management updated us that the 15,000 sf of new medical space to be created at its existing Raffles Hospital would be ready for use in Apr 2012. This would allow the group to accommodate an additional 15-20 new specialists. Commencement of operations at its new Specialist Medical Centre in the Orchard Road area is also expected to take place in 1H13, while we believe that its hospital expansion would be ready in 2014. We finetune our assumptions and introduce our FY13 estimates. Maintain BUY with a higher fair value estimate of S$2.66 (previously S$2.61), still based on 24x FY12F EPS.
RafflesMed – OCBC
EXPANDING FOR THE FUTURE
•Results showcase defensive earnings
•Final dividend of 3 S cents declared
•Forecasting margin expansion in FY12
4Q11 results within expectations.
Raffles Medical Group (RMG) reported its 4Q11 results which were within our expectations. Revenue rose 13.9% YoY and 4.6% QoQ to S$72.3m. Net profit increased 10.3% YoY and 39.9% QoQ to S$16.5m. For FY11, revenue of S$272.8m represented a 14.1% increase, and just 0.5% shy of our forecast. Reported PATMI rose 11.3% to S$50.4m. Excluding fair value gains on investment properties of S$2.2m, we estimate that core PATMI rose 14.1% to S$48.2m, forming 99.2% of our earnings projection. A final dividend of 3 S cents was declared, bringing full-year dividends to 4 S cents. This translates into a yield of 1.6% and was higher than FY10’s declared dividends of 3.5 S cents.
Benefiting from robust demand for quality healthcare services
We understand that RMG’s increment in revenue was driven largely by ASP increases, while volume growth contributed to a smaller extent. This improved performance was attributed to growth from its core Hospital Services and Healthcare Services divisions, which saw a double-digit jump in revenue of 14.6% and 10.9%, respectively. The former was driven by higher patient loads and a wider range of medical specialties on offer. Moving forward, we see margin expansion arising from further ASP increases, narrowing losses at its Shanghai medical centre and higher revenue intensity per patient.
Expansion taking place steadily
Management updated us that the 15,000 sf of new medical space to be created at its existing Raffles Hospital would be ready for use in Apr 2012. This would allow the group to accommodate an additional 15-20 new specialists. Commencement of operations at its new Specialist Medical Centre in the Orchard Road area is also expected to take place in 1H13, while we believe that its hospital expansion would be ready in 2014. We finetune our assumptions and introduce our FY13 estimates. Maintain BUY with a higher fair value estimate of S$2.66 (previously S$2.61), still based on 24x FY12F EPS.
SingTel – DMG
Optus Goes Vivid
THE BUZZ
Singtel announced yesterday that its wholly- owned subsidiary, Optus Mobile Pty Ltd has signed an agreement to acquire all the issued shares in Vividwireless Group (VW) Ltd from Network Investments Holdings Pty. Ltd for a cash consideration of AUD230m. Vividwireless holds spectrum licenses in the 2.3GHz band and operates two wireless broadband businesses under the brandnames of ‘vividwireless’ and ‘unwired’. The completion of the transaction is subject to various conditions precedent including the reissue of the 2.3GHz spectrum licenses and approvals of the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board.
OUR TAKE
Zeroing in on the spectrum. We view the acquisition positively for Optus given the access to 98MHz under the 2.3Ghz band, a prized asset that will complement the 1800MHz band being used for its upcoming 4G (LTE) mobile rollout. Optus stands to gain immediately from an existing fixed wireless brand in the market and a ready base of customers to migrate, allowing for the up-selling and cross selling of bundled mobile and broadband packages. This should result in longer term ARPU accretion and stickiness. We believe Optus will be add value to VW than it would be possible under Seven Network as it is already supplying backhaul infrastructure to VW. The acquisition is well timed ahead of the move into next generation networks (NGN) where competition in the market is expected to intensify. There is strong potential for mobile and wireless broadband in Australia given the estimated broadband penetration of 49% in the country. Also, the vast terrain makes wireless broadband more a more cost effective solution to reach out to certain sections of the market which are not covered by fixed access.
SingTel – DMG
Optus Goes Vivid
THE BUZZ
Singtel announced yesterday that its wholly- owned subsidiary, Optus Mobile Pty Ltd has signed an agreement to acquire all the issued shares in Vividwireless Group (VW) Ltd from Network Investments Holdings Pty. Ltd for a cash consideration of AUD230m. Vividwireless holds spectrum licenses in the 2.3GHz band and operates two wireless broadband businesses under the brandnames of ‘vividwireless’ and ‘unwired’. The completion of the transaction is subject to various conditions precedent including the reissue of the 2.3GHz spectrum licenses and approvals of the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board.
OUR TAKE
Zeroing in on the spectrum. We view the acquisition positively for Optus given the access to 98MHz under the 2.3Ghz band, a prized asset that will complement the 1800MHz band being used for its upcoming 4G (LTE) mobile rollout. Optus stands to gain immediately from an existing fixed wireless brand in the market and a ready base of customers to migrate, allowing for the up-selling and cross selling of bundled mobile and broadband packages. This should result in longer term ARPU accretion and stickiness. We believe Optus will be add value to VW than it would be possible under Seven Network as it is already supplying backhaul infrastructure to VW. The acquisition is well timed ahead of the move into next generation networks (NGN) where competition in the market is expected to intensify. There is strong potential for mobile and wireless broadband in Australia given the estimated broadband penetration of 49% in the country. Also, the vast terrain makes wireless broadband more a more cost effective solution to reach out to certain sections of the market which are not covered by fixed access.
RafflesMed – BT
RMG profit jumps 11.3% to $50.4m
A HIGHER patient load and wider range of medical specialities helped private healthcare provider Raffles Medical Group (RMG) post an 11.3 per cent rise in net profit to $50.4 million for the financial year ended Dec 31, 2011.
Revenue rose 14.1 per cent to $272.8 million, spurred by growth in both hospital services and healthcare services. Profit from operating activities came to $59.5 million, up 12.3 per cent from just under $53 million previously.
Earnings per share rose to 9.5 cents from 8.65 cents a year earlier.
RMG directors have recommended a final dividend of three cents per share, which would take the total payout for FY11 to four cents per share. An interim dividend of one cent was paid in September last year.
In 2011, foreign patients made up about a third of Raffles Hospital’s patient load, an increase of 5-6 per cent in volume, executive chairman Loo Choon Yong said. Revenue from foreign patients was up 14 per cent year on year.
‘With additional beds of new public and private hospitals coming onstream over the next few years, the healthcare landscape will continue to remain competitive,’ the group said.
‘While adding the Specialist Medical Centre in Orchard Road and expanding Raffles Hospital, the group continues to be vigilant and responsive to new opportunities that may appear.’
Upcoming hospitals such as Parkway Pantai’s 333-bed hospital at Novena – slated to open later this year – could intensify competition, Dr Loo acknowledged, though hospitals located closer to Novena may face stiffer competition.
In an update on its expansion plans, clinical operations at its Specialist Medical Centre on Orchard Road are likely to begin in the first half of 2013.
Planning and prepatory work to boost Raffles Hospital by some 102,400 square feet is underway and on track.
As at Dec 31, 2011, the group had a cash position of $50 million, which will help it to fund growth opportunities, it said.
Shares in RMG shot up nine cents yesterday to close at $2.44.