Sunday, April 19, 2009

RMG: 1Q09 results

Very nice. Both topline and bottom-line growth:
  • Revenue up 7%, abt 4M
  • Staff costs, the largest cost component, only up 4%, or 1M
  • 17% increase in purchased and contracted services (approx 600K), mostly due to insurance claims. Partially offset by a 4.5% decrease in consumables.
  • Profit before tax up 21%. 1Q09 EPS was 1.50c
The 1Q results take care about any concerns I had of RMG's revenue falling due to the recession. And their move into the insurance business with subsidiary International Medical Insurers looks to be paying off.

My only concern:
Medical insurance is a completely different business from providing healthcare:
  • Medical insurance may leave you with a lot of potential liabilities, especially when you offer worldwide coverage. Indeed, the business of medical insurance is to cover such unexpected liabilities. It is hard, mabye even impossible, to get a picture of such potential liabilities from a balance sheet.
  • This is more so when the insurance business results are consolidated with those of healthcare and hospital.
Other notes:
  • CIMB report (11th Mar) says they expect Raffles Hospital to increase bed capacity from 200 to 220 by 2010.
  • (BT article, Friday 17th Apr 09, Chen Huifen) At a media briefing..., Dr Loo said that only 40% of staff costs are fixed. Assume he is referring to the whole group (healthcare plus hospital).

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