Raffles Medical Group

[Contrarian]

With the insurance companies increasing premium and possibly increasing the deductable, will the patients still do as charge from $1? :-)

[Ray168]

Why does Raffles Medical drop a lot today? Any reason behind?

 Weak Medical Tourism Hits RaffleMed Q1 Revenue
26 Apr 2017 09:00
By Claire Huang

REFLECTING the tepid state of Singapore's medical tourism, private healthcare provider Raffles Medical Group registered a 1.7 per cent year-on-year dip to S$114.9 million in first-quarter revenue, with net profit up just marginally for the three months ended March 31, 2017.
In past quarters, medical tourists accounted for a third of the group's patients. This has now gone down to "20-odd per cent".

Loo Choon Yong, the group's executive chairman, said at a Monday briefing that the revenue fall was due to the effects of currency exchange.
"The economy has slowed down in the region and in Singapore, so fewer foreign patients are coming here. Our exchange rate is such that all of us have weakened against the US dollar, but we weaken less, they (regional countries) weaken more, so we're effectively more expensive for regional clients and compared to regional competitors."

Pointing to the the 1997 Asian financial crisis and 2008 global financial crisis, Dr Loo said the number of medical tourists that came to Singapore had fallen during those periods but rebounded later.

So he does not think that the decline in medical tourism here is "a sustained trend provided local providers do the right thing".
"People will pay you more because you're better but not infinitely more. You give premium care, they will expect to pay 'X' per cent more, but not hundreds of per cent more. So you need to price your products and services appropriately."

Revenue for the group's healthcare and hospital services divisions dropped 2 per cent and 1.9 per cent respectively.

Despite lower wage credit of S$0.7 million received by the group for the reporting quarter, against S$1.9 million for Q1 2016, net profit edged up 0.1 per cent year-on-year to about S$15.55 million as Raffles Medical managed to maintain profitability by containing costs. Operating profit, which fell 3.4 per cent S$18.09 million, would have risen 3.8 per cent if the wage credit item was excluded.

Earnings per share were 0.89 Singapore cent, down from the year-ago period's 0.9 cent, which was adjusted for a three-for-one share split for comparative purpose. Net asset value per share was 39.14 cents.

In terms of cashflow from operating activities, the group said it was S$18.2 million in Q1 2017. As at end March this year, it has a healthy cash position of S$119.4 million.

These would help support the group's investments in Raffles Hospital Shanghai and for the Raffles Hospital extension. Together, the two investments and capital expenditure for business expansion amounted to S$14.4 million in Q1.

On April 3, the group had said it would build a 700-bed international tertiary hospital in Liangjiang New Area in Chongqing, China. This is slated to open next year.

The Chongqing hospital would first open with 200 beds and from there, the group would "scale it up", said Dr Loo, who added that the rest of the space could then be used for teaching, training and research purposes.

On top of the 200 private beds, the group would also set aside 100 beds for the Chongqing public, who would be able to use their Yibao, a government-run public healthcare insurance plan, at the hospital.

Over in Shanghai, the 400-bed hospital "is progressing nicely", said Dr Loo. The group is now calling tender for the main development contract and is on target to open some time in 2019, he noted.

When asked, Dr Loo said the group is looking to hire 1,000 staff to run the Chongqing hospital and another 1,000 to operate the Shanghai hospital.

By 2020, the medical provider's China operations would be bigger than that of Singapore.

Currently, the group runs medical clinics in six Chinese cities including Shenzhen, Dalian, Shanghai and Beijing. They are operated by about 300 staff, of which more than 200 are Mainlanders.

Dr Loo is upbeat, saying: "We are pleased to have been able to secure the RafflesHospital Chongqing project. Together with the upcoming Shanghai hospital, we will be a major player in tertiary hospital services in China, where there is significant demand for good quality healthcare from locals and foreigners."

Raffle Medical shares closed trading on Monday down one cent at S$1.415, after results were released.

* This article was published in The Business Times on 25 Apr 2017 and is reproduced here with permission in its entirety.

[Art or Science]

Nibbled some as i feel its oversold with fundamentals intact. Long term, this stock should do okay. Extension of Raffles Hospital, expansion into China, etc.

[Bibi]

Nibbled some as i feel its oversold with fundamentals intact. Long term, this stock should do okay. Extension of Raffles Hospital, expansion into China, etc.

Got this report from my broker and quite a good read and probably the reason for the sell down.

Vested recently.

[Debronic]

Nibbled some as i feel its oversold with fundamentals intact. Long term, this stock should do okay. Extension of Raffles Hospital, expansion into China, etc.

Got this report from my broker and quite a good read and probably the reason for the sell down.

Vested recently.

Take the calls with a pinch of salt. If you scroll to page 8, you can see what the same analyst was recommending over the last 15 months or so. It was still a "buy" when prices were at 1.50+, downgraded to a "hold" when prices went down to 1.40-ish and now a "sell" when prices are < 1.10. Interesting trend, isn't it? It would be hard to imagine the fundamentals of an established healthcare group like RMG changing so much over the same period. 

[holymage]

Raffles Medical has no doubt been a gem in SGX for the past decade. Notably, the share price increase in recent years depended on P/E expansion due to the market's obsession about Healthcare stocks and a low yield environment. But investors are looking at past performance and extrapolating it into the future.

I think one important frequently-missed factor would be Raffles Medical's Hospital Services dependency on Medical Tourism. This division has been a key driver for Raffles Medical and has been slowing down in recent years. Reliance on foreign patients meant that Raffles Medical has to compete with overseas hospitals for patients. Thus, one would need to look at the larger macro picture and understand how it would affect Raffles Medical. A quick study of competitors, their expansion plans and targeted markets will show the challenges Raffles Medical is currently facing.

Here are some of the key regional competitors :
Malaysia (IHH, HMI)
Thailand (Bumrungrad)
Indonesia (Siloam by Lippo)

To survive, Raffles Medical has to expand overseas (which is what it is currently doing), increase overseas office coverage to even remote countries or procure more niche/complex medical cases. Do note that even during the 2008-2009 financial crisis, Raffles Medical experienced strong growth in revenue and profits, yet it is slowing down now.

Another possible reason for Raffles Medical current slowdown in growth would be limited capacity in its current facilities, that is why the need for an extension. But having read the aggressive growth plans by some of their regional competitors, I am not too optimistic about this.

This is without mentioning the plans for upcoming hospitals in Singapore within the next decade, given the incomparable population increase. The cost pressure in the coming years due to rapid ramp up in expansions. The uncertainty in China expansion. The impact due to changes in insurance policies with regards to private/restructured hospitals. Although Raffles Medical has strong branding, management team and marketing strategies, given the tailwinds through my quick and brief research, even its current valuation is simply too rich to warrant a detailed research. Good luck to those vested.

[Contrarian]

Nibbled some as i feel its oversold with fundamentals intact. Long term, this stock should do okay. Extension of Raffles Hospital, expansion into China, etc.

Got this report from my broker and quite a good read and probably the reason for the sell down.

Vested recently.

Take the calls with a pinch of salt. If you scroll to page 8, you can see what the same analyst was recommending over the last 15 months or so. It was still a "buy" when prices were at 1.50+, downgraded to a "hold" when prices went down to 1.40-ish and now a "sell" when prices are < 1.10. Interesting trend, isn't it? It would be hard to imagine the fundamentals of an established healthcare group like RMG changing so much over the same period. 

A friend told me.  just act in reverse of the analysts... sure make money.  :-)

[SLC81]

There are few chances in many years to get Raffles Medical and one is now.

[brattzz]

Raffles Medical Group Ltd Recommends Final Dividend for the Year Ended 31 December 2017
Source: Singapore Exchange
Type: Dividend Increases
From: 26/Feb/2018

The Directors of Raffles Medical Group Ltd. recommend a final dividend of 1.75 cents amounting to approximately SGD 31.0 million for the year ended 31 December 2017. The total dividend for the financial year ended 31 December 2017 will be 2.25 cents per share, an increase of 12.5% as compared to the previous year.

[holymage]

It just feels counter-intuitive for RMG to increase dividends given their increasing expenditures in the years to come, for the 2 new hospitals in Chongqing and Shanghai. They have planned to take on debt for the new hospitals. Perhaps to sustain investor's confidence?