OVERVIEW:
Founded in 1976, the counter evolved from two clinics to be a leading medical group with largest private group practice in Singapore. It provides general and specialized medical services. Its subsidiaries include Raffles Medical, Raffles Hospital, Raffles Dental, Raffles Chinese Medicine, Raffles Health Insurance, etc. Being a member of the Mayo Clinic Care Network, the counter has access to the finest medical expertise from US.
HIGHLIGHTS:
[1] The latest financial results saw its Q32015 revenue and earning up >5% year on year. Net profit grew 1% to S$15.7m. After accounting expenses on several investment projects as well as interim dividend, the counter maintain cash position at S$86m.
[2] The counter is facing higher pressure from expenses on staff and rental which was up ~20% year on year. Part of the costs are due to new and expanded operation outlets.
[3] Looking ahead, new revenue contribution shall come from Shaw Centre (4Q2015) and Holland Village (1Q2016). For overseas market, a new medical centre was opened last September. Two new presence in China will be completed on 2016, 2017. The counter seek to diversify its business into regions so as to cope with falling number of foreign patients recently.
INVESTMENT THEMES:
[1] Generally, regional medical counter is trading with P/E 40-50. The counter is trading at P/E ~ 35 which is in lower range. Thus current valuation is not expensive.
[2] Both UOB and OCBC set entry price ~ 4.3 for the counter. Current price is trading close to its support ~ 4.11. Valuable entry point is present now. Over past 4 years, moving average 200 used to be a good reference as entry points. It can be referred to chart below.
ENTRY PRICE:
Accumulate now.
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