The Three Numbers That Keep Raffles Medical Healthy

Ser Jing - Raffles Medical Group First Quarter Results, In the Pink of Health (pic)Raffles Medical Group (SGX: R01) not only looks after its patients health but it is also good at looking after its shareholder wealth.

Singapore’s integrated healthcare company operates a network of family medical centres, private hospitals and provides health insurance. It even has time to trade in pharmaceutical products and diagnostic equipment too.

Together, the various activities help to drive a Return on Equity of 15.8%, which is slightly higher than the average of 11.8% for the 30 companies that make up Straits Times Index (SGX: ^STI).

Raffles Medical has managed this by delivering a decent Net Income Margin of 18.2%, which is not too different from the market average. This level of profitability means that the company earns $18 on every $100 of sales after deducting all its costs.

Interestingly, Raffles Medical is very good at working its assets. Its Asset Turnover of 0.67 implies that it generates revenues of $67 on every $100 of assets employed in the business. The average for mid-cap companies is 0.2, while the median Asset Turnover for Singapore’s blue chips is 0.5.

The healthcare company has not taken excessive amounts of debt to finance the business. In fact, its Leverage Ratio of 1.3 is below the market average of 1.7.

By piecing together the various parts of Raffles Medical’s business, it is easy to see how the company keeps shareholders healthy. It is the product of a respectable Net Income Margin of 18.2%; an efficient Asset Turnover of 0.67 and a modicum of Leverage Ratio of 1.27.

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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 Director David Kuo doesn’t own shares in any companies mentioned.