The Good And Bad That Investors Should Know About Raffles Medical Group Ltd’s Latest Earnings

Raffles Medical Group Ltd (SGX: R01) runs hospital and healthcare services in Singapore. It also has a network of clinics in 13 cities in Asia. The company recently reported its financial results for the full year ended 31 December 2017 (FY17). In this article, we will look at the good and the bad from the results.

The results

Source: Raffles Medical’s FY17 Earnings Release

The above is a table from Raffles Medical FY17 full year earnings update. Overall, we can see that both revenue and profit after tax grew by 0.8% on a year-on-year basis.

The positives

First of all, Raffles Medical achieved record higher revenue in FY17, driven by growth in revenue in the Hospital Services and Investment Holdings divisions.

Secondly, the company generated strong cash flow from operating activities, amounting to S$98.3 million for the whole year. This resulted in a strong balance sheet with a cash position of S$98.3 million, as at 31 December 2017 (after paying S$141.6 million for its various investments).

Thirdly, the company recommended a final dividend per share of 1.75 cents. Including interim dividend of 0.5 cents, total dividend per share for FY17 is 2.25 cents, up 12.5% as compared to FY16.

Last but not least, the company has a number of projects to grow its business in the near to medium term. Raffles Specialist Centre, Raffles Hospital Chongqing and Raffles Hospital Shanghai are some examples of these projects.

The negatives

First of all, revenue from Healthcare Services division declined by 1.6% year-on-year, mainly due to the lower renewal of international healthcare plans for expatriates.

Secondly, operating margin declined from 17.3% in FY16 to 16.8% in FY17, mainly due to higher inventories and consumables used, and increased staff costs.

Last but not least, net cash position (cash and cash equivalents less total borrowings) has weakened from S$81.5 million last year to S$19.1 million, as at 31 December 2017. This was primarily due to higher project expenditure incurred for Raffles Hospital Extension and Raffles Medical Hospital projects in Shanghai and Chongqing.

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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a buy recommendation for Raffles Medical Group.