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Raffles Medical Group’s 2017 Earnings: Slight Growth in Net Profit

This morning, Raffles Medical Group (SGX: BSL) announced its financial results for the full year ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue for 2017 was S$477.6 million, inching up 0.8% from 2016’s revenue of S$473.6 million.

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2. For the year, revenue from Hospital Services division and Investment Holdings improved by 2.3% and 21.1% respectively, while revenue from Healthcare Services division declined by 1.6%. The revenue increase from the Hospital Services division was mainly due to higher local patient load. Revenue from Healthcare Services division fell due to lower renewal of international healthcare plans for expatriates. Meanwhile, the Investment Holdings division saw robust growth on the back of higher rental income from the fully-leased Raffles Holland V.

3. 2017 net profit attributable to shareholders went north by 0.8% year-on-year to S$70.8 million.

4. Diluted earnings per share for the year was unchanged at 4.0 cents.

5. Net profit margin for 2017 was flat at 14.8%.

6. The healthcare outfit’s balance sheet remained healthy, despite an increase in total debt. As of 31 December 2017, Raffles Medical had S$98.3 million in cash and equivalents, and S$79.2 million in total borrowings. This translates to a net cash position of S$19.1 million. Exactly a year ago, it had S$111.9 million in cash and equivalents and S$30.4 million in total borrowings, giving S$81.5 million in net cash. The reduction in net cash was mainly due to “higher project expenditure incurred for Raffles Hospital Extension and Raffles Medical Hospital projects in Shanghai and Chongqing”.

7. Return on equity for 2017 came in at 9.6%, down from 10.5% a year ago.

8. Operating cash flow rose 4.9% for 2017, from S$78.9 million to S$82.7 million. With Raffles Medical’s capital expenditure falling from S$14.5 million to S$10.0 million, the resulting free cash flow grew 12.9%, from S$64.4 million in 2016 to S$72.7 million in 2017.

9. A final dividend of 1.75 cents per share was declared, bringing 2017’s total dividend to 2.25 cents per share, marking a 12.5% increase as compared to 2016.

10. Raffles Medical gave updates on its expansions in Singapore and China. It said:

“The new Raffles Hospital’s extension, the Raffles Specialist Centre opened its doors to patients from 22 January 2018. Various specialist centres and the radiology centre have been relocated to the new building from the existing hospital. With the new Raffles Specialist Centre in operation, works have begun on Raffles Hospital to open up new wards to increase bed capacity, as well as to refurbish the podium for new food and beverage and related shops. Upon completion of these works by middle of the year, the two buildings Raffles Specialist Centre and Raffles Hospital will provide ambulatory and inpatient capacity to support the expansion of specialist services to serve the growing needs of our local and foreign patients.

Construction of Raffles Hospital Chongqing and procurement of equipment are progressing according to plans. Recruitment of International and Chinese physicians and hospital management staff have begun and response has been positive. Raffles Hospital Chongqing is planned to open in the fourth quarter of this year.

Raffles Hospital Shanghai, in Pudong Qiantan, is planned for opening in the second half of next year. Construction is also progressing according to plans.”

At the closing price of S$1.10 on Friday, Raffles Medical is selling at a trailing price-to-earnings ratio of 27.5 and a trailing dividend yield of 2%.

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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 Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Raffles Medical Group Ltd.