Raffles Medical - UOB Kay Hian 2024-07-30: 1H24 Results Slightly Below Expectations, Margins Remain Soft

• For 1H24, Raffles Medical Group (SGX:BSL) reported lower y-o-y revenue (-1.4% y-o-y) due to the absence of COVID-19-related revenue but higher revenue on a sequential basis (+8.8% h-o-h), driven by better revenue contributions from the hospital services and insurance segments.

Results slightly below expectations.

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• The underperformance was due to lower margins from higher operating expenses and lower-than-expected other operating income (-S$6m y-o-y). The lower other operating income was largely due to lower Wage Credit payout and Jobs Growth Incentive grant received in 1H24.
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Softer but stabilising margins.

• 1H24 EBITDA (-9.0ppt y-o-y, -0.6ppt h-o-h) and PATMI (- 7.8ppt y-o-y, -0.6ppt h-o-h) margins were softer due to the absence of higher-margin COVID-19 revenue, increased insurance expenses and operating expenses.
• 1H24 staff costs was largely stable (+0.2ppt y-o-y, +0.7ppt h-o-h) at 42% of turnover. However, driven by the ongoing shortage of nurses in Singapore, we expect staff costs as a percentage of turnover to normalise closer to the historical pre-pandemic level of 50% moving forward.

Healthcare services: Strong sequential performance and improved outlook.

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Llelleythan Tan UOB Kay Hian Research | Heidi Mo UOB Kay Hian | https://research.uobkayhian.com/ 2024-07-30 SGinvestors.io

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