Raffles Medical Group - OCBC Investment 2020-02-24: Building Up Its Digital Platform

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RAFFLES MEDICAL GROUP LTD (SGX:BSL)

Raffles Medical Group - Building Up Its Digital Platform

• Raffles Medical Group (SGX:BSL)'s FY19 PATMI declined -15% y-o-y, final dividend per share of S$0.02 declared.
• Digital platform launched to facilitate patients engagement during Covid19 outbreak.
• While Shanghai hospital opening preparations is underway, given disruptions from the ongoing Covid19 outbreak, the hospital’s opening date will hinge on when normalcy returns.
• Expects to remain profitable in FY20E barring unforeseen circumstances.

Subdued FY2019 results

• Group revenues grew 6.7% to SGD522mn, led by 9% gain in healthcare services and 5.9% growth in hospital services. EBITDA gained a modest 2.8% to SGD105.4mn with drag from Raffles Hospital Chongqing. Excluding Chongqing, EBITDA gained 11.8%.
• FY19 net profit of SGD60.3mn fell 15.2%. Net profit excluding exceptional items fell 14% to SGD58.1mn, partly resulting from property & equipment expenses.
• Overall cash position remained healthy at SGD1250.7mn.
• Proposed final dividend of 2.0 Scts per share, bringing full year dividend to 2.5 Scts per share and implying 2% yield based on last closing price of SGD1.01. See Raffles Medical Dividend History.

Operational update for Covid-19 situation

• A digital healthcare platform RafflesConnect was launched to provide patient advice remotely via teleconference which can be followed up with delivery of prescribed medication, while two types of ‘Virus Protect’ kits are also available for order online.
• To extend its reach to patients in Singapore, a fifth executive health screening centre at Waterway Point was added, with flexibility for patients to have select laboratory tests done at home via order from RafflesHealth e-store.
• While the new Shanghai hospital opening preparations is underway, given disruptions from the ongoing Covid19 outbreak, the hospital’s opening date will hinge on when normalcy returns. Prior guidance was a phased opening in 1H 2020.

Neutral view maintained

• Neutral view maintained, given fair valuations and time needed for the expansion plans in China to play out.
• See Raffles Medical Share Price; Raffles Medical Target Price; Raffles Medical Analyst Reports; Raffles Medical Dividend History; Raffles Medical Announcements; Raffles Medical Latest News.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-02-24

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.020 SAME 1.020