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RHB lowers Raffles Medical' s TP to $1.60 on declining revenue and cost headwinds
RHB Group Research analyst Shekhar Jaiswal has kept &ldquo buy&rdquo on Raffles Medical while lowering his target price to $1.60 from $1.65 previously.
In his report dated Oct 13, Jaiswal also reduced his earnings estimates for the group by 3% each for the FY2023 and FY2024.
The lowered target price and earnings estimates came after the analyst&rsquo s meeting with Raffles Medical&rsquo s management.
&ldquo Despite Covid-19-related revenue declining and cost headwinds comprising near-term concerns, the revival of its healthcare and hospital business in Singapore remains strong,&rdquo says Jaiswal, who remains upbeat about the group&rsquo s long-term growth.
The local healthcare business, which mainly comprises over 50 general practitioner (GP) clinics, saw a sharp growth in revenue during the Covid period from 2021 to 2022, the analyst notes.
&ldquo Raffles Medical indicated that the current patient load at its GP clinics is higher compared to that of the pre-pandemic period (i.e. 2019),&rdquo he writes. &ldquo It continues to realign its clinic network with a focus on demographics and demand centres, which means greater focus on suburban clinics as there were fewer corporate customers visiting the central business district GP clinics during the Covid-19 years.&rdquo
See also: SAC Capital reviews Enviro-Hub&rsquo s diversification into new businesses
&ldquo While the use of telemedicine was quite prevalent during the pandemic, the group believes the service will continue to complement its GP clinic network and is unlikely to replace current healthcare operations,&rdquo he adds.
However, the analyst foresees the elevated profit before tax (PBT) for Raffles Medical&rsquo s healthcare business to gradually taper off beyond 2023 and return to pre-pandemic levels as Covid-19-related revenue completely disappears.
In China, Jaiswal sees that the group&rsquo s business growth in the country is highly dependent on China moving away from its zero-Covid-19 policy.
&ldquo Management maintained that the ebitda breakeven period for its China operations remains unchanged at two to three years, but the year of achieving such a breakeven will depend on how soon China moves away from its zero-Covid policy,&rdquo Jaiswal notes.
&ldquo While Raffles Medical&rsquo s China business has seen a steady increase in the number of patient visits, we have revised our view that its Shanghai hospital could see a gradual ramp-up in operations only in 2023 (vs earlier expectations of a ramp-up in 2HFY2022),&rdquo he adds.
That said, Jaiswal sees that the group&rsquo s strong cash flow generation and &ldquo well-funded war chest&rdquo are positive for the group as it creates inorganic growth opportunities in China and the Asean region.
In his report, the analyst notes that the group has a net cash position of $135 million. He also expects the group to generate over $100 million of free cash flow in in the FY2022 to FY2024 as there is limited need for capital expenditure (capex) spending. Raffles Medical had also announced the establishment of a $1 billion multicurrency medium-term notes programme with DBS on July 30.
High inflation - High stress - High blood pressure...
Joelton ( Date: 19-Aug-2022 08:33) Posted:
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Rocket up soon. Compnay buy back for sometimes.
Target 1.55
Target 1.55
High inflation a boon for healthcare plays: DBS
HEALTHCARE plays will likely benefit from periods of high inflation with their ability to pass on higher costs to consumers due to inelastic demand, said DBS Group Research.
In an industry report published Thursday (Aug 18), analyst Rachel Tan noted a moderately positive correlation between Consumer Price Index and the healthcare index, as hospital players outperformed the Straits Times Index during the high inflationary period from 2000 to 2013.
She cited the example of Raffles Medical : BSL 0% &mdash as a proxy to healthcare players &mdash noting that the company had recorded higher revenue growth during the high inflation period while earnings before interest, taxes, depreciation and amortisation margin was maintained or increased.
This led her to maintain buy ratings on IHH Healthcare : Q0F 0% and Raffles Medical, as she noted the latter' s strong recovery post Covid-19 as well as its ability to raise prices in a high inflation environment.
DBS' s target price on IHH Healthcare' s Malaysian listing was RM7.90 while Raffles Medical had a target price of S$1.64.
However, Tan said that this does not mean that hospital stocks are entirely spared during an economic downturn, despite the general perception that healthcare is typically more resilient.
" While healthcare is a ' necessity' , private healthcare spending could be seen as a ' luxury' during challenging economic conditions," she said.
Raffles Medical Group
Between Aug 1 and 2, Raffles Medical Group (RMG) : BSL +2.27% executive chairman and non-independent director Loo Choon Yong acquired 353,800 shares of the private healthcare provider for a consideration of S$435,484. At an average price of S$1.23 per share, this increased his direct interest from 10.82 per cent to 10.84 per cent. Dr Loo&rsquo s total interest in RMG is 53.16 per cent, which has gradually increased from 51.93 per cent at the end of 2014.
His preceding acquisition was on Mar 23, with 500,000 shares acquired at S$1.14 per share.
Dr Loo jointly founded 2 RMG clinics in 1976 with Dr Alfred Loh. RMG has since consistently grown over the years to serve more than 2 million patients and 7,000 corporate clients each year.
Prior to the Aug 1 market open, RMG reported H1 2022 group revenue of S$382.3 million, representing 11.2 per cent growth from H1 2021.
Attributed to the return of patients to its clinics, the H1 2022 healthcare division revenue of S$255.6 million was up 24.1 per cent from H1 2021. At the same time, revenue from the hospital services division, decreased to S$151.8 million, down 11.4 per cent from H1 2021, due to a decrease in the number of Covid-19 PCR diagnostic tests.
With revenue growth outpacing growth of staff costs, the group&rsquo s H1 2022 profit after tax at S$60.0 million represented 54.4 per cent growth from H1 2021. As of Jun 30, 2022, the group also remained in a net cash position with S$288.0 million in cash.
With the results, Dr Loo highlighted that RMG, having continued to build capabilities in the past year, is well-positioned to serve returning international and local patients as pandemic measures ease. The executive chairman added that the group was pleased that its patients continue to trust the Raffles brand of quality healthcare services, and that the group will continue to innovate to serve their evolving holistic healthcare and wellness needs.
On the Covid-19 front, RMG noted that with a high proportion of Singapore residents already fully vaccinated, the group&rsquo s Covid-19 support activities in the areas of stand-alone vaccination and PCR test centres have tapered off.
The group added that it continues to support the government in operating combined testing and vaccination centres in 2 locations in Singapore and in addition, it will continue to offer step-down Covid-19 care service in the community treatment facilities that it operates.
RMG further noted that while the group&rsquo s operations in China were impacted by lockdowns, it had received approval to set up an in-vitro fertilisation/assisted reproductive therapy centre at Le Cheng, Hainan, China. This facility will complement its 3 existing China hospitals&rsquo offerings through forming a full life-cycle service chain within its obstetrics and gynaecology practices for its patients across China, targeted to serve the estimated 40 million women in China who may require reproductive fertility services.
Raffles Medical chair ups stake following H1 2022 results
FOR the 5 trading sessions that spanned Jul 29 to Aug 4, the Straits Times Index (STI) gained 1.5 per cent, with the FTSE China A50 Index declining 3.2 per cent, the Hang Seng Index falling 2.5 per cent and the FTSE Bursa Malaysia KLCI adding 0.9 per cent.
Overall, institutions were net buyers of Singapore stocks over the 5 sessions with S$156 million of net inflows, following on from S$111 million of net outflow for the preceding 5 sessions.
OCBC, : O39 +0.25% Singapore Airlines, : C6L -0.18% DBS, : D05 +1.33% CapitaLand Integrated Commercial Trust, : C38U -2.74% and Keppel Corporation : BN4 +0.28% led the net institutional inflows for the 5 sessions through to Aug 4.
Meanwhile, UOB, : U11 -0.11% Singtel, : Z74 +2.33% Yangzijiang Shipbuilding, : BS6 +0.54% ST Engineering : S63 -0.24% and NetLink NBN Trust : CJLU -0.53% led the net institutional outflows for the same period.
Share buybacks
There were 6 primary-listed stocks conducting share buybacks over the 5 sessions ended Aug 4, with a total consideration of S$26.5 million, up sharply from the S$1.2 million filed for the preceding 5 sessions.
Keppel Corporation, OCBC and Japfa : UD2 0% led the consideration tally. Keppel bought back 2,756,000 shares at an average price of S$6.98 per share. On the current mandate, Keppel has bought back 1.80 per cent of its issued shares (excluding treasury shares).
On Jul 28, Keppel Corp reported an overall H1 2022 net profit of S$498 million, an increase of 66 per cent over the previous year, underpinned by profitability across all segments including the discontinued offshore & marine operations.
Excluding the discontinued operations, the group&rsquo s net profit from continuing operations in H1 2022 was S$434 million, or 26 per cent higher from H1 2021, bolstered by recurring income which grew 43 per cent to S$202 million.
During the H1 2022 results webcast, Keppel maintained that one of the original intentions of the S$500 million buyback programme (announced in January) was to have adequate cash for potential merger and acquisition transactions, particularly involving founders&rsquo platforms.
Management noted that it may achieve better alignment with the founders where the company pays partly in cash, partly in shares and the share buyback is partly to fund that, and to fund its share plans at Keppel Corporation.
Director and substantial shareholder transactions
The 5 trading sessions saw close to 70 changes to director interests and substantial shareholdings filed for more than 30 primary-listed stocks.
This included 5 company director acquisitions with one disposal filed, while substantial shareholders filed 6 acquisitions and 6 disposals.
Raffles Medical first-half profit jumps 51.3% on Covid-19 services, return of medical tourism
SINGAPORE (THE BUSINESS TIMES) - Raffles Medical Group reported a profit of nearly $59.7 million for the half year ended June 30, a 51.3 per cent rise compared with the $39.4 million a year ago.
This came largely on the back of higher revenue from Covid-19-related services as well as a comeback in medical tourism as Singapore reopened its borders, it said in a regulatory filing on Monday (Aug 1).
Diluted earnings per share for the first half of the year gained 51.2 per cent to $0.0319 from $0.0211 in the year-ago period.
Revenue for the private healthcare provider saw an increase of 11.2 per cent to $382.3 million in the first half of 2022, from $343.8 million in the same period in 2021.
No interim dividend was declared for the half-year period. The group had earlier announced a change in practices starting in financial year 2021, to consolidate its interim and final dividends into an annual core dividend of up to half its average sustainable profit after tax and minority interests.
The board said it remained " cautiously optimistic" that the return of foreign patients seeking medical treatments in Singapore will continue, amid an ongoing Covid-19 battle and the emergence of new and more virulent or infectious strains.
Raffles Medical also expects to remain profitable for the rest of the year, although it flagged concerns in operational challenges from a tight labour market, inflationary cost pressures driven by the labour shortage, and a rise in oil prices from the ongoing Ukraine war.
Highlights of 1H 2022 Performance
▪ Group achieved 11.2% growth in revenue to S$382.3 million
▪ Group&rsquo s EBITDA grew 43.5% to S$107.0 million
▪ Group&rsquo s Profit after Tax grew 54.4% to S$60.0 million
▪ Revenue from Healthcare Services Division increased by 24.1%
▪ Healthy cash position of S$288.0 million
▪ Approval to open In-Vitro Fertilisation/Assisted Reproductive Therapy Centre at Le Cheng Hainan
▪ Group achieved 11.2% growth in revenue to S$382.3 million
▪ Group&rsquo s EBITDA grew 43.5% to S$107.0 million
▪ Group&rsquo s Profit after Tax grew 54.4% to S$60.0 million
▪ Revenue from Healthcare Services Division increased by 24.1%
▪ Healthy cash position of S$288.0 million
▪ Approval to open In-Vitro Fertilisation/Assisted Reproductive Therapy Centre at Le Cheng Hainan
Thanks for sharing your valuable info. never aware of raising retirement age in China before.
anyway, i' m afraid of " crackdown" in China will spillover into Healthcare industry (not including Health-Tech) especially when gap between the rich and the poor got widen
but if Chinese Authority want to crackdown hearlthcare industry (or make their ppl feel their " common prosperity" policy) by force private healthcare service providers allocated some of their facilities (no more than 10% of total capacity)
to services the poor for free or low rate. i think it' s OK. but if anything more than this.....I should consider for my alternative again :)
anyway, i' m afraid of " crackdown" in China will spillover into Healthcare industry (not including Health-Tech) especially when gap between the rich and the poor got widen
but if Chinese Authority want to crackdown hearlthcare industry (or make their ppl feel their " common prosperity" policy) by force private healthcare service providers allocated some of their facilities (no more than 10% of total capacity)
to services the poor for free or low rate. i think it' s OK. but if anything more than this.....I should consider for my alternative again :)
ssw518 ( Date: 31-Jul-2022 07:36) Posted:
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One of the challenges is for Raffles to recruit sizeable good doctors in China, indirectly translate to staff cost.
For the rich to flock to Raffles, the quality of doctors must be there. And it will not be cheap. I am not worried about the availability of doctors (Just 0.1% of pedigree doctors would suffice).
Else I do agree medical industry is the future for ageing world population.
Wonder any plans for Raffles to expand or nearer in HK instead?
Vested.
For the rich to flock to Raffles, the quality of doctors must be there. And it will not be cheap. I am not worried about the availability of doctors (Just 0.1% of pedigree doctors would suffice).
Else I do agree medical industry is the future for ageing world population.
Wonder any plans for Raffles to expand or nearer in HK instead?
Vested.
For China, few news might be nice to comsider.
1) aging population, old ppl tend to need more medical attention, but the rich one with more jialut sickness goes to HK normally
2) China also have plan to increase retirement age, FYI only
3) Rich and poor gap widen, if you notice Uncle Xi' s campaign, the percentage between both should be very huge too.
just sharing, gl to all
1) aging population, old ppl tend to need more medical attention, but the rich one with more jialut sickness goes to HK normally
2) China also have plan to increase retirement age, FYI only
3) Rich and poor gap widen, if you notice Uncle Xi' s campaign, the percentage between both should be very huge too.
just sharing, gl to all
clientuser ( Date: 29-Jun-2022 21:05) Posted:
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RMG announces estabishment of 1BillionSGD multicurrency medium term notes programme
https://links.sgx.com/FileOpen/RMG%20Announcement%20-%20Establishment%20of%20MTN%20Programme%20-%2030%20July%202022.ashx?App=Announcement& FileID=725623
https://links.sgx.com/FileOpen/Raffles%20Medical%20Group%20MTN%20-%20Information%20Memorandum%20dated%2030%20July%202022.ashx?App=Announcement& FileID=725624
https://links.sgx.com/FileOpen/RMG%20Announcement%20-%20Establishment%20of%20MTN%20Programme%20-%2030%20July%202022.ashx?App=Announcement& FileID=725623
https://links.sgx.com/FileOpen/Raffles%20Medical%20Group%20MTN%20-%20Information%20Memorandum%20dated%2030%20July%202022.ashx?App=Announcement& FileID=725624
CGS-CIMB upgrades Raffles Medical to &lsquo add&rsquo but lowers target on China&rsquo s zero-Covid policy
CGS-CIMB has upgraded Raffles Medical : BSL 0% from &ldquo hold&rdquo to &ldquo add&rdquo , albeit with a lower target price of S$1.27, down from S$1.33 previously.
CGS-CIMB analyst Tay Wee Kuang on Saturday (Jul 9) revised his estimates on expectations that revenue from Covid-19-related services could fall about 60 per cent in FY2022 to FY2024 as Singapore moves towards an endemic Covid-19.
&ldquo Even though the latest wave of infections suggests that the Singapore government could once again step up collaboration efforts with private healthcare providers like Raffles Medical, we believe the intensity of such efforts will be much lower, given the smaller scale of operations for Covid-19 testing, vaccinations, as well as management of community facilities,&rdquo said Tay.
The earnings gap, he expects, will likely be bridged by a recovery in medical tourism and the return of domestic patients undergoing elective treatments that had been deferred over the last 2 years. Tay noted the group&rsquo s year-to-date acute private hospital admissions/specialist outpatient visits had improved to 84 and 97 per cent of pre-Covid levels respectively, up from 80 and 67 per cent in FY2020.
Meanwhile, the group&rsquo s healthcare arm in China is likely to see prolonged &ldquo gestation woes&rdquo as China extends its zero-Covid policies. Tay believes this will further delay Raffles Medical&rsquo s earnings before interest, taxes, depreciation and amortisation (Ebitda) breakeven by a year from operations at its new hospitals in Chongqing and Shanghai.
The analyst has hence revised his target price estimates, pegging it to 16 times the estimated enterprise value to Ebitda ratio. The target price of S$1.27 also represents a 9 per cent upside to the counter&rsquo s trading price, which closed flat at S$1.11 on Tuesday.
I guess the coming result (1H2022) is not good
but hope it' s not down to negative growth
personally, I hope ZERO GROWTH for buttom line (profit) with range +/- 5%
but hope it' s not down to negative growth
personally, I hope ZERO GROWTH for buttom line (profit) with range +/- 5%
bbpaige ( Date: 04-Jul-2022 10:29) Posted:
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SG hospitals proven record but NEW China Hospitals , very exciting to hear but need to see actual results... heard a podcast by IHH CEO frw months back , sounds like they gave up on their China biz..cited hard to hire doctors there to scale up as country has very tight career progression route for doctors.. more beneficial for them to work on state linked hospitals..
clientuser ( Date: 29-Jun-2022 21:05) Posted:
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despite they have been buying back share agressively, the price still very depressed
halleluyah ( Date: 29-Jun-2022 08:40) Posted:
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I' m not Singaporean. I' m Thai but still bullish on Raffles Med for some reasons (and of course, I hold it too)
1. on my FB feed, I found my friends flew to Singapore recently. This positive sign for Singapore both tourist and patient overseas can fly to SG
2. ramp-up demand in China may takes time, generally Greenfield project (New Hospital in new area/new city) may takes 3 - 5 years to reach break-even point but Brownfield project (New building at the same area -- mostly just build new building) takes shorter time.
but I still doubt about average bill per patient in China hospitals, I guess Raffles Med can charge lower than in SG hospital.
Cheer up :)
1. on my FB feed, I found my friends flew to Singapore recently. This positive sign for Singapore both tourist and patient overseas can fly to SG
2. ramp-up demand in China may takes time, generally Greenfield project (New Hospital in new area/new city) may takes 3 - 5 years to reach break-even point but Brownfield project (New building at the same area -- mostly just build new building) takes shorter time.
but I still doubt about average bill per patient in China hospitals, I guess Raffles Med can charge lower than in SG hospital.
Cheer up :)
yesterday coy buy back 700,000 shares at 1.12/1.13.....27/6 buy back 200,000 shares at 1.12.....22/6 & 17/6 buy back 100,000 shares respectively at 1.11.....16/6 400,000 shares at 1.13.....Yesterday covid cases surge almost double to 11,504 new cases....hosp will be getting more busy.....am looking to accumulate.....
rotation...most likely will be in play after sleeping gso long.....
Bear market! 