- Raffles Medical's FY24 revenue and PATMI exceeded our expectations at 116% /127% of our FY24e estimates respectively. 2H24 adj. PATMI jumped 49% y-o-y to S$34.9mil.
- Revenue rebounded 14% in 2H24 from a recovery in elective surgeries and foreign patients in Singapore and a bounce in China volume. Margins expanded as staff costs stabilised and insurance operations broke even in 2H24.
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The Positive
Insurance and healthcare recovery.
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- Margins have recovered from more stable staff costs and greater use of flexible workers.
The Negative
- Nil.
Outlook
- Despite keeping prices stable, patient flows and revenue intensity have started to recover for Raffles Medical. Foreign patient and elective surgery volumes have improved in Singapore.
- China's patient volume has increased as local patients gain better visibility and experience than in public hospitals. The rollout of national medical insurance and more public doctors practising in the hospital will further drive patient volumes. China could break even in 2026.
- Other growth areas include raising prices and expanding into new countries such as Indonesia, which welcomes investment and allows foreign doctors to practise locally.
Upgrade to ACCUMULATE from NEUTRAL recommendation and raise target price to S$1.02.
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