Business
Provides healthcare services and hospital services.
34% healthcare, 62% hospital and 4% investment.
Future:
·
Raffles Hospital expanded, floor area
doubled. A one stop hub.
·
Emergency Care Collaboration with MOH
·
Regional representative office in Vietnam and
Indonesia. More to come.
·
More heartland healthcare.
Management
Dr Loo is the co-founder of Raffles Medical. He is the Chairman.
He holds 51.86% shares of Raffles Medical, so he has control
of the management. We are not sure of
his exact salary, just reported as 92% bonus and 8% salary which is over
$500k. In my view, he is flexible and
ready to take less when times are bad because 92% from bonus. As compared to Q & M, Dr Loo is getting a
higher salary but Q & M CEO takes 80% salary and the rest bonus and
benefit.
Number
Debt to Asset is only 18%. Does not have high leverage loan to finance operation.
Definitely considered a growth company, profit leap more than 15% in 5 years.
Retained earnings is increasing yearly, I believe keeping money for expansion and giving out less dividend.
A drop in cash in 2014, due to payment in investment properties or expansion.
Profit margin about 20%.
No long term debt, only short term debt. Generally downtrend debt.
ROE on the downtrend, getting less efficiency. Between 12 and 15%.
Dividend payout ratio is < 45%. Highest 45% and lowest 32%. I believe money kept for expansion.
Will never be undervalued.
Growth company so cannot expect high dividend yield.
Based on 2014, the average PE is 24. Highest 35 and lowest 14 (that was 2009).
In my view it is unlikely for PE is go to 10. If crisis is here, it will be realistic to
buy when PE is 14 to 20.
In 2014, its EPS is 0.12.
PE 14 - $1.68 and PE 20 - $2.4.
Anything below $2.4 will be good.
In 2014, price $4.2, dividend is 1.3%. Even if price go to
$2.4, dividend yield is 2.2%.
CAGR = 10%
PEG = 3.4, no good.
Have to compare with another companies of similar industry to evaluate
if it is consider growth.
Using growth rate of 10%, Discounted Cash Flow method, intrinsic
value is $1.65 (just for a rough gauge, I will not use it as a price I will
enter but just a guide).
Final View
Will not buy this stock now (Mar 2016). As my view, it does not pay very good
dividend to keep me waiting. So I will
only buy if margin of safety is very big, PE to be ≤ 20. With Holland V expansion in progress, will
expect to see revenue to go up in the near future. Only once that happen, we may see a good
stream of dividend. For the time being,
it is a wait for price to come to around $2 before I will make the first
purchase. I will label as growth and
turning a mature stock in 5 or 10 years.
If I find a blue chip with big dividend yield, higher chance
to rebound, the amount allocate for Raffles Medical will reduce.
