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.
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.
Land Transport – Phillip
Some help in funding bus capex
Sector Overview
The Transportation Sector under our coverage consists of Airlines (SIA, Tiger Airways), Shipping (NOL), Land Transport (SMRT, ComfortDelGro) & Aviation Services (SIA Engineering, ST Engineering, SATS).
• Government initiative to fund bus capex
• Profitability of bus business had been poor
• Mildly positive for Land Transport operators
• Continue to prefer ComfortDelGro over SMRT
What is the news?
Singapore's government announced a commitment to increase bus capacity in Singapore over the next 5 years. The government recognized that planned rail capacity injections from the new rail lines would take time to materialize, but easing of daily congestion is a more immediate task. Consequently, the government would partner the public transport operators (PTOs) to add c.800 buses into the system over the next 5 years. Of these new buses, the government would fund the purchase of 550 buses, while the PTOs would add the balance 250. To fund this purchase and the running costs for 10years, the government will establish a Bus Services Enhancement Fund worth S$1.1bn.
How do we view this?
We view this as mildly positive for the Land Transport operators (SMRT, ComfortDelGro). Higher CAPEX and increased operating expenses due to the increase in fleet size had been a drag on the profitability of the bus business for both PTOs that are struggling to breakeven in recent quarters. SBST and SMRT operate c.3k and c.1k buses respectively and the capacity injection would increase capacity by 20%.
Investment Actions?
We continue to prefer ComfortDelGro over SMRT due to its cheaper valuation and better geographical diversification. While the initiative is positive for the PTOs, We opine that better clarity on the future fare review mechanism would provide better confidence to investors.
Land Transport – Phillip
Some help in funding bus capex
Sector Overview
The Transportation Sector under our coverage consists of Airlines (SIA, Tiger Airways), Shipping (NOL), Land Transport (SMRT, ComfortDelGro) & Aviation Services (SIA Engineering, ST Engineering, SATS).
• Government initiative to fund bus capex
• Profitability of bus business had been poor
• Mildly positive for Land Transport operators
• Continue to prefer ComfortDelGro over SMRT
What is the news?
Singapore's government announced a commitment to increase bus capacity in Singapore over the next 5 years. The government recognized that planned rail capacity injections from the new rail lines would take time to materialize, but easing of daily congestion is a more immediate task. Consequently, the government would partner the public transport operators (PTOs) to add c.800 buses into the system over the next 5 years. Of these new buses, the government would fund the purchase of 550 buses, while the PTOs would add the balance 250. To fund this purchase and the running costs for 10years, the government will establish a Bus Services Enhancement Fund worth S$1.1bn.
How do we view this?
We view this as mildly positive for the Land Transport operators (SMRT, ComfortDelGro). Higher CAPEX and increased operating expenses due to the increase in fleet size had been a drag on the profitability of the bus business for both PTOs that are struggling to breakeven in recent quarters. SBST and SMRT operate c.3k and c.1k buses respectively and the capacity injection would increase capacity by 20%.
Investment Actions?
We continue to prefer ComfortDelGro over SMRT due to its cheaper valuation and better geographical diversification. While the initiative is positive for the PTOs, We opine that better clarity on the future fare review mechanism would provide better confidence to investors.