Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis. Singapore’s market bellwether, the Straits Times Index (SGX: ^STI), has started the week on the right note by inching up 0.11% to 3,226 points. Let’s take a look at a couple of market beaters which come from both within and outside the index. Ascendas Real Estate Investment Trust (SGX: A17U), which is part of the STI, is up 1.31% to S$2.32 after releasing its second quarter earnings…
Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis.
Singapore’s market bellwether, the Straits Times Index (SGX: ^STI), has started the week on the right note by inching up 0.11% to 3,226 points. Let’s take a look at a couple of market beaters which come from both within and outside the index.
Ascendas Real Estate Investment Trust (SGX: A17U), which is part of the STI, is up 1.31% to S$2.32 after releasing its second quarter earnings last Thursday. The REIT, which owns 106 industrial properties located mainly in Singapore, saw its quarterly gross revenue grow by 8.6% year-on-year to S$164.8 million. This helped the trust’s net property income to increase by 7.0% to S$114.7 million. Ascendas REIT’s top-line growth came on the back of new property acquisitions and positive rental reversions of 6.3% during the quarter.
The top-line growth trickled down to the bottom-line with the REIT’s distribution amount for the quarter ended 30 September 2014 inching up by 1.6% to S$87.8 million; the REIT’s distribution per unit (DPU) followed suit with a 1.7% uptick to 3.66 Singapore cents.
Looking ahead, unit-holders of Ascendas REIT might be happy to know that the trust sees “potential upside” when some of its space is being leased, given that 12.8% of its portfolio is vacant. The REIT’s manager also commented on the possibility of rental growth, which should be welcome news for unit-holders:
“In addition, the average passing rental rates of leases in our portfolio due for renewal in [the financial year ending 31 March 2015] are still below the market spot rental rates; hence, positive rental reversion can be expected when such leases are renewed.”
Healthcare services provider Raffles Medical Group Ltd. (SGX: R01) is next in line with its shares gaining 1.55% to S$3.93. The market seems to have given its thumb of approval for the company’s latest third quarter results which was released this morning.
For the quarter ended 30 September 2014, Raffles Medical’s revenue grew by 11.1% year-on-year to S$94.5 million, driven by a 16.4% increase in revenue in its Healthcare Services business segment. In turn, Healthcare Services had experienced growth on the back of “a higher patient load, an expanding RafflesMedical clinic network as well as contributions from an increased provision of healthcare insurance services.”
The company’s most important segment, Hospital Services, also experienced healthy growth as revenue there stepped up by 7.3% due to “addition of new specialists” to Raffles Hospital and “higher inpatient admissions.”
All told, the top-line growth had helped to drive an 11.3% year-on-year increase in the company’s profit to S$15.4 million.
Investors in Raffles Medical might be happy to note the progress of two of the company’s important growth initiatives: 1) The expansion of Raffles Hospital; and 2) the construction of a medical/retail centre near Holland Village in Singapore.
For the hospital expansion, Raffles Medical has “finalized the development plans” and groundbreaking for the project “is scheduled to take place by end 2014.” The extension will see the company’s flagship Raffles Hospital expand its gross floor area from 300,000 square feet to 520,000 square feet upon completion.
As for the medical/retail centre, works are “in progress.” The centre would have a total gross floor area of 65,000 square feet, of which 9,000 has been earmarked for the company’s medical and specialist services. The rest of the space would be occupied by DBS Bank, “upmarket retail” stores, and “reputable food and beverage tenants.”
Despite the healthy earnings-uptick Raffles Medical has enjoyed and the growth plans which are in place, the company did sound out a word of caution about its future in the earnings release:
“The healthcare landscape will remain competitive with new public and private hospitals, as well as medical suites, being developed in Singapore and the region. The shortage of healthcare manpower remains a challenge for all healthcare operators in Singapore. The more measured pace of economic growth in China, Hong Kong and Singapore may have a dampening effect on healthcare demand in general.”
But, the company remains confident of its prospects, as can be seen from the following comment:
“However, given its investments in RafflesHospital Extension and Raffles Holland Village as well as its healthy cash flow and net cash position, the Group is well poised for the future. The Group is closely monitoring the market conditions in China and Hong Kong, and will continue to be vigilant and responsive to new opportunities that may arise both regionally and globally.”
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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 writer Chong Ser Jing owns shares in Raffles Medical Group.