Raffles Medical Group

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(24-02-2014, 11:31 PM)mulyc Wrote:
(24-02-2014, 06:43 PM)yawnyawn Wrote: At current market cap of $1.83B, RMB is trading at 30x earnings if we exclude the gain on RMM disposal and fair value gain on investment properties.

That, sounds really expensive. It's been in my watchlist for the longest time, but I've have several bad customer service related experiences there and while of course that is not as corelated, for some reason i never got down to vesting in it.

It is in my watchlist too. It has one of the best profit margins in their industry and in the coming 3 years they are going to expand Raffles hospital in Bugis and to build one hospital each in Shanghai and Shenzhen. I think a PE in the low 20s should be a good entry point.

Anybody vested in this counter? What is a good entry point for this?

To be honest, I have only gone for "value approach". Recently bought FCL amongst others..

However, I'm not too sure how to approach the "growth approach". FCF, good steady growth in terms of net income etc., seemingly good management with their interests somewhat align with minority investors.

Winston Churchill:-
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
"The farther backward you can look, the farther forward you are likely to see."
2014 Q1 Financial Statements: http://infopub.sgx.com/FileOpen/RafflesM...eID=293710

Summary (from Straits Times)
Quote:SINGAPORE - Raffles Medical Group said on Monday its first-quarter net profit rose 8 per cent from a year ago to $14.56 million, driven by higher revenue growth.
Revenue climbed 8 per cent to $87.6 million for the first three months of the year, boosted by more patients as the group's clinic network expanded and it secured more corporate contracts.
The Singapore-listed group also dealt with more healthcare insurance services and added more specialist consultants to its group practice, further lifting revenue, it said.
Raffles Medical remained in a strong cash position, with $98.3 million in its coffers as at March 31.
2014 Q2 Results: http://infopub.sgx.com/FileOpen/RafflesM...eID=307143
SINGAPORE: RafflesMedicalGroup on Monday (Oct 27) said its net profit for the third quarter rose 11.3 per cent from a year ago to S$15.4 million, on the back of an 11.1 per cent rise in group revenue to S$94.5 million.

The hospital and medical services provider said the growth was driven by a higher patient load, expanding clinic networks and increased provision of healthcare insurance services.

Hospital services revenue increased by 7.3 per cent during the quarter, mainly due to the addition of new specialists to the group and higher inpatient admissions compared with last year.

Going forward, the company said development plans for its hospital extension project have been finalised. The extension, on the site adjacent to the hospital, will add an additional 220,000 sqft to its present 300,000 sqft of gross floor area.

RafflesMedical expects to break ground at the new site by the end of this year.

(Recently vested) Big Grin
My Dividend Investing Blog
Investment Thesis:
- Despite Raffles Medical Group’s fundamentals and strong economic moat, we believe paying a premium of 56%% based on current market prices to be unjustified.
- Stronger growth in Healthcare segment from FY2016E onwards with potential risks from competition within the region.

Full Report: Here
ValueEdge - Opportunities Within Asia
Here's my quick opinion on raffles medical based on:

- pb 4.2 - seems a high ratio. Doubtful if its moat is worth that much a premium to its book.
- pe 25 - likewise seems high to me
- yield 1.4% - too low.

Year Total Amount
2014 0.055
2013 0.045
2012 0.04
2011 0.035
2010 0.03
2009 0.025
2008 0.025
2007 0.04 a 1 for 10 bonus issue in 2007
2006 0.04
2005 0.025
2004 0.025

Dividends for past 10 years are regular, no skipped. But the amount looks erratic. There looks as though an uptrend from 2009, but is it from the effect of post crisis recovery? Its hard to say.

The way i see it is the only person laughing his way to the bank is the CEO. A typical case of towkay huat zai at expense of others.

I agree that the price is too high to be justified and it is high risk to buy RMG now.
Raffles Medcial Group should be judged as a counter with growth poised in 3 years time.

Right now, it is expanding its current mainflag hospital and creating a Holland V outpatient centre. These two developments will expand its hospital services GFA by two folds and create some revenue from renting for commercial purposes. Therefore earnings wise, one can expect RMG's EPS growth by about 70%.

Due to its expansion policy, the company is using its cash reserves to pay the land premium for the two plots of land and take some loans (it seems their bank interest is <5%). So for a P/E 25 stock, with potential growth of 70%, this means its forward FY17 P/E is about 14.7. I believe for RMG case, Mr. Market has priced the stock fairly accurate with maybe 5% discount to account on execution of expansion plans. This explains why RMG is not giving out good dividends now

So its a neither undervalue nor overvalued stock for me.

<not vested>
Would agree that RMG should be judged as a growth stock. However, the question would be are people paying too much for this growth prospect which would only occur in 3 years time. Of course this varies from individuals, however, we still need to look at it from a logical standpoint. Hence, to me I do not believe Mr. Market to have priced it fairly but there is some amount of premium attributed to individual's expectations for this company.

(not vested)
ValueEdge - Opportunities Within Asia
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