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Raffles Medical Group First Quarter Results: In the Pink of Health?

Ser Jing - Raffles Medical Group First Quarter Results, In the Pink of Health (pic)Healthcare provider Raffles Medical Group (SGX: R01) released its first-quarter results earlier this morning. With the recently completed quarter, the company has managed to continue a trend of double-digit year-on-year quarterly revenue growth that stretches back to at least the third quarter of 2011 – top line rose by 11.2% from S$72.9m a year ago to S$81.1m. Meanwhile, RMG’s quarterly profit jumped by 16.2% from $11.7m a year ago to S$13.6m.

Drilling down into some detail, the company’s revenue increase can be attributed to growth from its Hospital Services and Healthcare Services divisions which clocked in at 16.4% and 4%. The Hospital Services’ double-digit growth rate is healthy for RMG as the division made up 62% of the company’s full-year revenue of $311.6m in 2012.

In particular, management commented that its Raffles Hospital unit ‘registered strong growth and is expected to contribute positively to the Group’s performance’ for the year ahead. More specialists were added to the payroll of the company’s flagship hospital and there are several ongoing projects for it, which includes installation of better information and records systems. The hospital’s re-licensing on Jan 2013 by the Ministry of Health also went smoothly and the company has expanded its Intensive Care Unit.

For the quarter, the company’s Raffles Medical unit had continued to receive support from corporate clients – companies from the aviation, hoteling, food & beverage and financial sectors had renewed their contracts with RMG to provide medical support.

Turning to the company’s balance sheet, it had repaid a $16m bank loan on February 2013 and has a net-cash position of S$98.7m. That’s an improvement over last year’s net-cash position of S$82.7m.

Regarding the company’s outlook for the rest of 2013 and beyond, management commented: “With additional beds of new public and private hospitals coming on-stream in Singapore and the region, the healthcare landscape will remain competitive. The more measured pace of economic growth in China and Singapore may have a dampening effect on healthcare demand. However, the Group continues to be vigilant and responsive to new opportunities that may arise. Barring unforeseen circumstances, the Directors are optimistic that the Group will continue to grow in the year 2013.

At today’s opening price of $3.42, RMG’s shares are selling for 32 times its last-12-month’s earnings and sport a dividend yield of 1.3% based on last year’s full-year payout.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.