Raffles Medical Group’s (RMG) FY15 results met our expectations. Revenue grew 9.6% YoY to S$410.5m, forming 99% of our FY15 estimate, which was driven by a 14.6% improvement in Healthcare services and a 7% increase for Hospital services.

Higher operating lease expenses were recorded due to continued expansion of its clinic network, while staff costs also came in higher due to the tight labour market for healthcare workers and costs from the newly acquired subsidiaries of International SOS (MC Holdings) Pte Ltd. As a result, PATMI rose 2.4% to S$69.3m.

Excluding fair value gains on investment properties, PATMI was up 4.9% to S$67.8m, meeting 102% of our full year estimate. The group also declared a higher final DPS of 4.5 S-cents, bringing total dividends to 6.0 S-cents, vs. 5.5 S-cents last year.

Maintain BUY, while we place our fair value estimate of S$4.59 under review pending more information at the analyst briefing later this morning. The company is also proposing a 3:1 share split, subject to shareholders’ approval.

Source: OCBC Research - 22 Feb 2016