SG: Raffles Medical Group - Softening our growth assumptions

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.58

RAFFLES MEDICAL GROUP 30 Apr 2012

SOFTENING OUR GROWTH ASSUMPTIONS - Double-digit revenue and PATMI growth - Still room for expansion - Competition & cost pressures the key risks Raffles Medical Group (RMG) reported 1Q12 revenue of $72.9m (+13.2% YoY and +0.9% QoQ), forming 23.2% of our full-year estimates. This was in line with expectations. PATMI of S$14.2m (+10.9% YoY, -29.6% QoQ) formed 19.6% of our FY12 forecasts. Although 1Q is traditionally RMG's weakest quarter, this still came in slightly below our expectations. Moving forward, we see room for further expansion in RMG's operations, underpinned by robust demand for high quality healthcare services and the possibility of RMG taking on the treatment of subsidised patients as a collaboration with the Singapore government. Nevertheless, we ease our growth assumptions on the back of higher competitive and cost pressures. Maintain BUY on RMG, albeit with a revised fair value estimate of S$2.58, versus S$2.66 previously.