Raffles Medical Group Ltd – A Proxy For Medical Tourism

Medical Tourism is a fast-growth industry in Asia. More patients are seeking specialised treatment at destinations outside their home countries.

Three countries that have been identified as beneficiaries of this trend are Thailand, India and Singapore, which account for roughly 90% of medical tourism in Asia.

The industry is projected to grow at a compound annual growth rate (CAGR) of 22% from 2014 to 2018, according to RNCOS. This could put one company listed in Singapore in a sweet spot. That company is Raffles Medical Group Ltd (SGX: R01).

Raffles Medical Group runs hospital and healthcare services in Singapore. It also has a network of clinics in five countries and thirteen cities. Additionally, it has a hospital under development in China, which is projected to be completed by 2018.

Group revenue has increased from S$272.8 million in 2011 to S$410.5 million in 2015. This equates to a CAGR of 8.5% over the five year period.

Group profit after tax has increased at a CAGR of 6.5% reaching S$69 million at the end 2015.

The strong growth in revenues and profits were achieved while maintaining a strong balance sheet. Raffles had debt of S$32.2 million at end 2015 while cash and equivalents came in at S$86 million. In other words, it had net cash of S$53.8 million.

Cash flow at Raffles has been strong. It came in at S$38.1 million (Operating cash flow of S$72.8 million and Capex of at S$34.7 million).

All in all, it can be seen that Raffles has been growing strongly over the past five year. Together with the optimistic outlook for the healthcare industry, it could be well positioned for the future.

But investors should keep in mind that macroeconomic trends and past growth may not always translate into future growth. As such, investors should always dig deeper.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of Raffles Medical Group. Motley Fool Singapore contributor Esjay owns shares in Raffles Medical Group.