FY12 core EPS is in line at 97% of our forecast, confirming renewed
operating efficiency. More importantly, the potential for an overseas
venture with China Merchant Bank adds excitement, underscoring the
group’s longer-term plans for Hong Kong and Shenzhen.
4Q12 core PATMI meets our
expectations. Still, we lower our
FY13-14 EPS by 2% for future higher
taxes and introduce FY15 EPS.
Accordingly, our target dips ever so
slightly, still based on 22x CY14 P/E
(its mid-cycle valuations). Maintain
Outperform with the resumption of
operating efficiencies providing
potential catalysts.
Pricing power returned
A higher patient load (+9% yoy) and
higher patient acuity are evident in
this set of results. 4Q12 marked the
group’s turning point, contributing
36% to FY12 profit. Revenue of
S$312m (+14.2% yoy) came from
Hospitals (+16% yoy) and Healthcare
Services (+11% yoy). More
importantly, price increases (+7%
yoy) kicked in, marking the return of
RFMD’s pricing power which was
missing in 2Q-3Q12. FY12 dividend
has been raised to 4.5cts/share (FY11:
4.0cts).
All well in Orchard?
The group may have to wait another
month to find out the outcome of its
application for a new proposed
specialist centre in Orchard Road.
Management seems upbeat on
approval.
Big overseas intention
RFMD has signed a Letter of Intent
with China Merchant Bank, to jointly
develop an integrated international
hospital with more than 200 beds in
Shekou, Shenzhen, China. The
proposed hospital is expected to
provide high-end medical services to
foreigners and affluent local
residents in the Pearl River Delta.
Investment value for RFMD’s share
of the JV has been estimated at
S$150m. If RFMD pursues this
opportunity and Chinese approval is
granted, the hospital could be ready
in three years’ time. (Read Report)
Source : CIMB Research
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