- Raffles Medical (SGX:BSL) reported 1H24 revenue of S$365.7mil (-1.4% y-o-y, 48% of revised FY24F estimates), on par with our expectations. Excluding intersegment revenue, hospital services remained robust (+2% y-o-y), as Raffles Hospitals in China continued to gain traction.
1H24 revenue in line, earnings below.
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- Raffles Medical's 1H24 PATMI of S$30.6mil (-49% y-o-y, 45% of revised FY24F estimates) however fell short of our expectations on higher-than-expected operating losses of S$6.4mil in 1H24 vs S$1.3mil loss in 1H23 at RHI, with the higher loss ratio consistent with industry trends.
China hospitals a promising growth engine though we remain cognisant of gestational losses.
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- China’s slowing economic growth and the stronger Singapore dollar may also dampen the demand for high-end healthcare services whilst margins may face some compression due to inflationary pressures.
- Nevertheless, we continue to have a long-term positive outlook on Raffles Medical due to the healthcare industry's long-term positive trajectory and the potential for its China hospitals to ramp up as they reach stabilisation and breakeven in the medium term.
Insurance a wild card.
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