Raffles Medical - DBS Research 2022-11-01: Surpassing Record-Breaking Year

Raffles Medical - Surpassing Record-Breaking Year

RAFFLES MEDICAL GROUP LTD (SGX:BSL) | SGinvestors.ioRAFFLES MEDICAL GROUP LTD (SGX:BSL)
  • Raffles Medical (SGX:BSL) released its 3Q22 Business Update, delivering another quarter of solid results as expected, in line with the strong 1H22 results. Raffles Medical's 3Q22 reported revenue growth of 6.5% y-o-y to S$199.5m while net profit surged by 62.1% y-o-y toS$38.3m. See Raffles Medical's announcement dated 31 Oct 2022. This is its first since the company moved to half-yearly reporting.
  • 9M22 saw revenue and net profit growth of 9.6% y-o-y and 57.3% y-o-y to S$581.8m and S$98.2m, respectively, ahead of our more conservative full-year estimates. While we earlier projected that Raffles Medical to benefit from reopening as COVID-19 services taper, at 97% of our full-year estimates, this is tracking way ahead of our expectations.
  • Raffles Medical continues to see foreign patients returning and attributed the strong net profit growth to better cost control and deployment of manpower, together with lower inventories and consumables used as well as a reduction in purchased and contracted services.
  • Raffles Medical continues to expect foreign and local patients to return for treatment at its RafflesHospital, RafflesMedical, and RafflesDental branches. The potential reopening of China will also benefit RafflesChinaHealthcare.
  • However, Raffles Medical highlights that slowing economic growth could dampen some high-end healthcare services, given the volatile macroeconomic environment.

Raffles Medical - Valuation & Recommendation

  • We revised up our FY22F-FY24F earnings forecast for Raffles Medical by 12% to 29% y-o-y, in line with the stellar 9M22 results. We believe that Raffles Medical is on track to record stellar FY22 results, achieving record-high earnings, as the strong earnings growth seen year-to-date in 9M22 will continue for the rest of the year.
  • With the recent public hospital bed crunch, we believe Raffles Medical, as the partner of the MOH on the Emergency Care Collaboration, could also be a beneficiary during this Omicron XBB wave, which is likely to contribute in 4Q22.
  • We maintain our BUY rating and target price of S$1.64 for Raffles Medical. Given the strong earnings delivered year-to-date, our target price for Raffles Medical is based on a more normalised P/E multiple of 22x, at -1 standard deviation of its historical range from 26x (historical mean) previously on FY23F earnings.
  • Despite some normalisation in FY23F onwards, as COVID-19-related services continue to taper off, we do not discount that a stronger-than-expected recovery post China reopening may see sustainable elevated earnings in FY23F-FY24F. In addition, new-variant COVID waves and potential COVID vaccination that is to continue may see some COVID-19-related services returning.
  • Raffles Medical's share price is currently trading at very attractive levels with FY23F P/E of 19x, close to -1.5 standard deviation of its historical mean.




Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.




Rachel Lih Rui TAN DBS Group Research | https://www.dbs.com/insightsdirect/ 2022-11-01



Previous report by DBS:
2022-08-02 Raffles Medical Group - Another Record-Breaking Year!.

Price targets by 5 other brokers at Raffles Medical Target Prices.
Listing of research reports at Raffles Medical Analyst Reports.

Relevant links:
Raffles Medical Share Price History,
Raffles Medical Announcements,
Raffles Medical Dividends & Corporate Actions,
Raffles Medical News Articles















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