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$RAFFLES MEDICAL GROUP LTD(BSL.SI)$

Highlights

Dividend Policy

 ° Changed to Annual Dividend (from Semi-Annual).

 ° Formula - Up to Half of Average Sustainable PATMI. I assume 'sustainable' to mean recurring operating income & 'average' to give them flexibility to maintain the same or gradually increasing dividend (starting from 2.5ct)

 ° For FY21, Expected Div = 2.5ct (same Total Dividend since FY18)

China Operations

 °  The main drag on RafflesMed for the past few years had been the China hospitals. During the construction phase, it drags down FCF due to high CAPEX. Upon completion, it drags down profitability till there's enough critical mass of patient load.

 ° ChongQing Hospital ought to be profitable soon, if not now as it's already been operating for about a year now. Nevertheless, there ought to be minimal drag on both FCF & Earnings.

 ° Shanghai Hospital will provide the drag on profitability for the next one year. However, Chongqing Hospital expected turn to profitability ought to be able to mitigate this.

 Last Comments

 ° RafflesMed has likely turned the corner of falling EPS & FCF + Increasing Debts, due to the completion of both China hospitals.

 ° The market seems to agree, with share prices increasing steadily since the latest results were announced on 26-Jul from $1.1x to $1.3x.