Raffles Medical Group

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Acceptance of option to subscribe for 70,000 ordinary shares at an exercise price of S$2.20 per share granted under Raffles Medical Group (2010) Share Option Scheme.
Consideration for the option is S$1.00.

Is the consideration for the option of S$1.00 is the subscribtion price of the right to exercise the option ?
So total cost is S$3.00 if they exercise it ??
tonylim Wrote:Is the consideration for the option of S$1.00 is the subscribtion price of the right to exercise the option ?
So total cost is S$3.00 if they exercise it ??

The $1 is for all 70,000 shares i.e. total cost = (70k * $2.20) + $1.
(20-04-2011, 12:12 AM)d.o.g. Wrote:
tonylim Wrote:Is the consideration for the option of S$1.00 is the subscribtion price of the right to exercise the option ?
So total cost is S$3.00 if they exercise it ??

The $1 is for all 70,000 shares i.e. total cost = (70k * $2.20) + $1.

Many thanks to d.o.g. .
Happy investing.
(31-10-2010, 09:06 AM)valuehunter Wrote: With the spotlight trained on medical groups (e.g. Parkway and Thomson Medical) recently, it is perhaps timely to look at the other major player in Singapore.

RMG's share price has also rebounded nicely form the low of 50+ cents during the worst of the financial crisis. With:

(1) a strong balance sheet and net cash of $70.9 million (13.5c/share), (2) a good record of cashflow,
(3) a varied offering of medical services catering to the wealthy in the region (check up their website) and
(4) future expansion of Raffles Hospital (additional capex of $80 million to $100 million funded from internal resources)

is there still value at the last traded price of $2.18/share? Current valuation does seem rich. However, it is a good business to own given that there will always be demand for its services and its profit margins are also decent. Any views?

Strongly agree with your point: "it is a good business to own given that there will always be demand for its services and its profit margins are also decent."

Have been a shareholder of RMG since 2008/2009. Bought most of my shares when they were below $0.80. RMG is in a good industry and Dr Loo has proven himself to be a good leader who is able to manage the company's growth and finances very well.
Business Times - 29 Feb 2012

RMG eyes revenue boost from expansion

Plans to launch new specialist centre and extend hospital


RAFFLES Medical Group (RMG) is eyeing a 50 per cent bump in revenue by 2014 from its expansion plans to launch a new specialist medical centre and extend Raffles Hospital.

'We are hopeful that our topline would grow by 50 per cent due to a combination of the expansion of the hospital and the start-up of the Raffles Specialist Centre in Orchard, which would in total increase our floor area from 300,000 square feet to 450,000 square feet,' said executive chairman Loo Choon Yong.

In addition to extending Raffles Hospital by some 102,400 sq ft, the group is also launching a specialist medical centre at Bideford Road. The medical centre is slated to come onstream in 1H2013 while expansion of the hospital is on track for completion by 2014.

At the same time, increasing the number of specialists is also expected to contribute to the topline.

This year, RMG plans to boost staff count by 200, recruiting specialists in fields such as oncology, neurology, fertility, orthopaedics and ophthalmology.

Commenting on how its growth plans would impact the bottom line, Dr Loo said both the bigger hospital and new medical centre would allow for greater efficiency, given more bed capacity and increased use of facilities.

Meanwhile, in an interview with Reuters yesterday, Dr Loo said that the group may raise its average service charge in Singapore by 4-5 per cent this year to keep up with anticipated salary increments.

The government is currently reviewing the salary structure of healthcare staff as it seeks to attract more people to work in the public health sector. This may require the private sector to follow suit to retain talent.

According to RMG, its fees for surgical cases work out 25-50 per cent cheaper versus comparable private tertiary hospitals, giving it some flexibility to work with when nudging up fees. The group has not yet decided exactly when this year the increase would kick in, it told BT.

Dr Loo also said in the Reuters interview that its loss-making medical centre in Shanghai, which was launched in 2010, is likely to swing into the black next year as costs stabilise and patient numbers grow, and that RMG is looking into the possibility of building a hospital in China.

For the financial year ended Dec 31, 2011, RMG posted an 11.3 per cent rise in net profit to $50.4 million thanks in part to a higher patient load and a wider range of medical specialties. Revenue rose 14.1 per cent to $272.8 million, spurred by growth in both hospital services and healthcare services.

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Recent strength in share price likely boosted by STI bullishness and interest generated by IHH (RafflesMed looks cheap @ PE 26 when compared to IHH historical PE??). Extracts of OCBC securities report dated 13 Jul 12,

• Strong beneficiary of medical travel growth
• Capacity to increase in stages
• Raising fair value to S$2.73

Healthy medical travel growth trend
We believe that Raffles Medical Group (RMG) would continue to benefit strongly from the healthy uptrend in medical travellers to the region, despite growing supply of new hospital beds from both local and regional competitors. This is premised on the group’s competitive pricing vis-à-vis its comparable peers, strong brand equity and continued drive to enhance the depth of its specialist offerings. Research firm Frost & Sullivan projected that the number of medical travellers to Singapore and the corresponding revenues generated would grow at a CAGR of 12.4% and 13.6% to 851k and S$2.03b, respectively, from 2012 to 2016.

Steady expansion plans to address rising demand
RMG’s new Specialist Centre in Orchard is scheduled to begin operations in 1H13, while its Raffles Hospital extension (additional 102,408 sf) is expected to be completed in early 2015. In the meantime, management has actively decanted some of its existing hospital facilities. This resulted in the opening of a Neuroscience specialist centre in Apr, while renovation works are ongoing for the expansion of its Health Screening facilities. We reckon this would improve its income streams as there could be follow-up treatment procedures.

Ease our margin assumptions slightly, but maintain BUY
RMG recently implemented wage increments across the board in 2Q12, driven by the Singapore government’s initiative to raise salaries in the public healthcare sector. We ease our EBIT margin assumptions and our PATMI forecasts for FY12 and FY13 are reduced by 2.1% and 1.4%, respectively. We believe that part of RMG’s cost pressure also arose from headcount expansion in preparation for the commencement of its new Specialist Centre. While these additional staff would also aid in the generation of revenue at existing premises now, pre-operating expenses incurred would cause some drag on its earnings as their contribution is not at an optimal level yet, in our view. We roll-forward our valuations to 24x blended FY12/13F EPS, which in turn raises our fair value estimate from S$2.58 to S$2.73. Maintain BUY.


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Q212 Results extracts (pg10),

Revenue for the Group showed a healthy growth of 14.9% from S$67.0 million in Q2 2011 to S$76.9 million in Q2 2012. The growth in revenue came from positive contributions in all divisions of the Group. Revenue from Hospital Services and Healthcare Services divisions increased by 19.1% and 9.1% respectively.

Profit from operating activities grew 4.7% from S$14.3 million in Q2 2011 to S$15.0 million in Q2 2012. This was driven by higher patient load and patient acuity. The Group’s net profit after tax increased by 7.1% to S$12.5 million in Q2 2012 from S$11.7 million in Q2 2011.

The Group had a healthy cash position of S$84.2 million as at 30 June 2012, from the continued strong operating cashflow of the Group.

More employees were recruited by the Group to meet business expansion and wages were raised in line with industry wide salary adjustments. These factors accounted for the increased staff costs of 19.1%, comparing Q2 2012 to that of Q2 2011.

Despite the good results, I have decided to reduce my holdings for the following reasons,

- It'd gone up a fair bit (likely spillover from IHH IPO) since it hit a recent low of <$2.10. Current PE = 27.16 (FY11) or 26.35 (last 4Qs) vs Revenue / Profit Growth last year in low teens.
- Mkt seems nervous. Same old issues of Greece and Spain again. Can sleep better with extra cash aro'.
- Someone from CP '73' is collecting today and may be supporting the price. Let's leave some money on the table for this fella Big Grin

Am left with 1/4 of holdings (eg. Got 4, sold 3 and left 1). Hope I can buy back at a lower price, target max. PE in low 20s.
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
Raffles Medical Group said earnings grew 16% to $13.5 million for the first quarter ended March 31 (1QFY2013) from $11.6 million in 1QFY2012 due to higher operating profits on improved revenue performance and higher operating efficiencies.

In the same period, revenue rose 11.2% to $81.1 million from $72.9 million. The double-digit growth in revenue was mainly attributable to contributions from the Hospital and Healthcare Services segments, which increased by 16.4% and 4.0% respectively. Higher patient acuity and the addition of specialist consultants have expanded the depth and breadth of medical services provided by the group, which also contributed to the better performance.

As at March 31, the group had a healthy cash position of $102.6 million after repaying a bank loan of $16 million in February 2013. The group continues to enjoy and benefit from its strong operating cashflows from its various business units. This cash position will support the group’s growth and expansion plans in the medium term.
Patience is a virtue.
6.9 million aging population coming......
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i think what i like about raffles medical is their use of their cash flow and the ability to generate cash flow consistently. it perhaps shows hospital being better business compare to clinics.
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