Raffles Medical Group (RMG) reported a 8.5% YoY increase in its 2Q14 PATMI to S$15.6m on the back of a 6.6% growth in revenue to S$92.6m. The latter was driven by a 14.7% revenue jump for its Healthcare division, while its Hospital Services division grew at a slower pace of 4.9%. For 1H14, revenue was up 7.3% at S$180.2m and PATMI rose 8.2% to S$30.2m. This formed 47.3% and 44.4% of our FY14 forecasts, respectively. We view this set of results as in-line with our expectations as 2H is traditionally RMG’s stronger half.

RMG also declared an interim dividend of 1.5 S cents/share, slightly higher than the 1 S cent/share dividend declared in 2Q13. We will provide more details after the analyst briefing. Given RMG’s strong share price performance YTD (+27%), we place our Buy rating and S$3.90 fair value estimate under review.

Source: OCBC Research - 29 Jul 2014