Raffles Medical’s 1H25 results were a slight miss, despite higher revenue (+3.5% y-o-y) and PATMI (+4.8% y-o-y). Management remains hopeful that China operations can achieve an EBITDA-breakeven in 2026.
1H25 results a slight miss.
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However, the 1H25 net profit was still deemed a slight miss, forming 45.4% of our full year forecasts. The lower-than-expected bottom line was due to a few factors, including:
muted revenue growth of the healthcare service segment and China hospitals,
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some unfavourable forex translation from the weakened US dollar.
Excluding all one-offs, Raffles Medical's 1H25 core net profit would have risen 8.8% y-o-y to S$32.5m (1H24: S$29.9m), by our estimate.
Better cost profile.
1H25 EBITDA and net margins were largely stable, backed by better cost discipline across its hospitals. 1H25 staff costs to revenue ratio was better than expected (-0.6ppt y-o-y) while 1H25 consumable costs to revenue also improved y-o-y (-0.1ppt y-o-y). However, driven by competition for 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.
As a recap, the Ministry of Health announced pay increases of up to 7% for healthcare professionals starting 2H25, with public nurses receiving increments of up to 4%. Thus, we expect to see increased manpower costs moving into 2H25.
Healthcare services: Expecting moderate growth driven by healthy underlying demand.
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Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
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