Raffles Medical share price in state of emergency

Sometimes life is stranger than fiction. On paper, Raffles Medical share price should have risen steadily for the past 5 years because of increasing revenue and net profits. For most investors, that would be a reasonable assumption. In reality, Raffles Medical share price plummeted from $1.58 to the current $1.00 level. The massive correction of Raffles Medical share price represented a horrifying 37% decline within the span of three years. The unfolding meltdown of Raffles Medical share price must have scared the living daylight out of investors.

Can Raffles Medical share price ever rock again?

Perennial Real Estate Holdings versus Raffles Medical

My stock analysis of Raffles Medical Group

Sure, many analysts claim that the healthcare is an evergreen sector because of Singapore ageing population and that investors should stay calm. On this note, I do not disagree. In fact, revenue for Raffles Medical increased from $374million in FY2014 to $489million in FY2018. Net profits increased from $67million to $71million during this period. But against the backdrop of such consistently good financial performances, what were the intriguing dark forces behind the rupture of Raffles Medical share price?

Make no mistake, the devastating plunge of Raffles Medical share price would have wiped out whatever meagre dividends that investors collected for the past few years (assuming they had entered at the high of $1.58). Given the current Raffles Medical share price level, let’s examine whether the time is ripe to enter or avoid this counter.

Raffles Medical share price decline

First off, Standard Life Aberdeen stunned the market by selling 1.12 million shares on 26 February 2019. In the process, Standard Life Aberdeen ceased to be a substantial shareholder of Raffles Medical. That was a killer blow as Raffles Medical share price got bombed out, dropping from $1.10 and never looked back since. We all know support from the big boys is important, so obviously the market did not take the news kindly.

Then again, is it really the end of the road for Raffles Medical share price? To answer this question, there is a need to examine the Return on Equity (ROE) and evaluate the management’s strategy to stimulate growth. Determining these factors would provide the basis for future Raffles Medical share price movements.

ROE measures how efficient a company deploys the shareholder capital to generate returns. Simply put, if two companies generated the same amount of profits, the one that used a smaller working capital will have a higher ROE. To be frank, the data for Raffles Medical does [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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The rationale for launching this activity is to level the playing field for retail investors, who often lack access to quality SGX stock research, especially homegrown SME stocks. Through this SGX stock research campaign, I hope to raise interest in SGX stocks among local investors, and at the same time, encourage members to share ideas and showcase their analytic skills. The winning entry will be published in this blog for learning purposes.

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