Raffles Medical Group’s (RMG) FY16 results came in within our expectations. Revenue grew 15.4% YoY to S$473.6m, forming 98% of our FY16 estimate, which was driven by a 30.8% improvement in Healthcare services and a 6.3% increase for Hospital services.

Given the expansion plans, the group recorded higher costs from several fronts including higher staff costs due to staff recruitment for expanded business operations and the new medical centre in Raffles Holland V. Excluding the results of International SOS (MC Holdings) and its subsidiaries (MCH), the group’s operating profit would have grown 4.4% vs. 1.7%.

PATMI was marginally up 1.3% to S$70.2m, meeting 96% of our full year estimate. Pending more information at the analyst briefing later this morning, we are keeping our BUY and S$1.61 Price Target, given the group’s pipeline of expansion plans.

The group also declared a final DPS of 1.5 S-cents, bringing total dividends to 2.0 S-cents.

Source: OCBC Research - 20 Feb 2017