Raffles Medical Group is set to announce its first-half 2025 results on 28 July, with UOBKayHian forecasting steady earnings growth despite ongoing challenges. The healthcare provider anticipates a 10% year-on-year revenue increase to approximately S$402m, with net profit expected to rise by 11% to around S$34m. This growth is attributed to improved patient loads at its Chinese hospitals, despite facing stiff regional competition and rising manpower costs in Singapore.
The company is grappling with increased competition for nurses, which is expected to drive up manpower costs as the Ministry of Health has announced pay increases for healthcare professionals. This is likely to impact margins, as staff costs are projected to normalise back to the historical average of 50% from 41% in the second half of 2024. Additionally, the strong Singapore dollar and competition from neighbouring countries like Malaysia and Thailand are expected to keep foreign patient levels muted.
However, Raffles Medical’s Chinese operations are showing promise, with Raffles Hospital Chongqing and Shanghai expected to contribute significantly to the group’s revenue. In 2024, revenue from China grew by 10.1% year-on-year, and the company expects this trend to continue as patient visits increase. The EBITDA breakeven timeline for these hospitals is set for the end of 2026.
Despite these challenges, Raffles Medical maintains a “Buy” recommendation with a revised target price of S$1.18, up from S$1.06, citing potential earnings growth and expansion opportunities in China and Vietnam. The group remains optimistic about future mergers and acquisitions, which could further bolster its market position.
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