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A Close Look At Raffles Medical Group Ltd’s Growth, Dividend, And Valuation

Healthcare services provider Raffles Medical Group Ltd (SGX: BSL) has been a great long-term winner in Singapore’s stock market.

Over the past five and 10 years, shares of Raffles Medical have gone up by 109% and 423% in price, respectively.

Here are three important aspects about the company that may interest investors, namely, its growth, dividend, and valuation.

1. Growth

The table below shows how Raffles Medical’s revenue and earnings per share have changed over its last five completed fiscal years:

raffles-medical-business-results-table-lawrence
Source: S&P Global Market Intelligence

Raffles Medical’s share price growth in the last five years has been accompanied by improvements in its business. From 2011 to 2015, the company’s revenue and earnings per share have climbed by a total of 50% and 28%, respectively.

2. Dividend

At Raffles Medical’s current share price of S$1.505, it has a dividend yield of 1.3% thanks to its trailing dividend of S$0.02 per share. This yield is actually lower than the market average, as represented by the SPDR STI ETF (SGX: ES3). The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index (SGX: ^STI). It has a yield of 3.2%.

We can also try and assess the sustainability of the company’s dividend by looking at two financial ratios: the debt-to-shareholders’ equity ratio and the pay-out ratio. But, do bear in mind that there are many other things to look at beyond the two ratios.

The debt-to-shareholders’ equity ratio is a gauge for the level of financial risk a company is taking on. Meanwhile, the pay-out ratio is the percentage of a company’s profit that is paid out as a dividend. Generally speaking, the lower the two ratios are, the better it could be.

With Raffles Medical’s trailing earnings of S$0.0409 per share, it has a pay-out ratio of 49%. Based on its latest financials (as of 30 June 2016), it has a debt-to-shareholders’ equity ratio of just 4.7%.

3. Valuation

We’ve already seen Raffles Medical’s earnings per share and share price. Putting the two numbers together gives us the company’s price-to-earnings ratio of 36.8. There are two things to note about this figure.

First, Raffles Medical’s current PE ratio is near a five-year high, as the following chart illustrates:

raffles-medicals-pe-ratio-over-past-five-years
Source: S&P Global Market Intelligence

Second, the healthcare services provider’s PE ratio is nearly thrice the SPDR STI ETF’s PE ratio of 12.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.