Raffles Medical Group (RMG) reported its FY13 results this morning that were within our expectations. Revenue rose 9.4% to S$341.0m and was 1.9% below our forecast. PATMI surged 49.3% to S$84.9m, but was partly boosted by fair value gains of investment properties (S$3.9m) and a disposal gain from its Thong Sia building divestment (S$20.4m). Excluding these items, we estimate that core PATMI rose 14.5% to S$60.6m, forming 99.8% of our core earnings projection. The improved performance was attributed to growth from both RMG’s Hospital Services and Healthcare Services divisions, which registered an increase in revenue of 12.4% and 6.2%, respectively. This was in turn driven by higher patient loads and increased depth of medical specialties offered. A final dividend of 4 S cents/share was declared, bringing fullyear DPS to 5 S cents (FY12: 4.5 S cents/share). We will provide more updates after the analyst briefing. For now, maintain BUY on RMG, but our fair value estimate of S$3.61 is under review.

Source: OCBC Research - 24 Feb 2014