Raffles Medical Group’s 3Q16 revenue grew 17.5% YoY to S$119.3m as both the Healthcare and Hospital Services divisions saw their segment revenue increase 39.7% and 6.0%, respectively. This was driven by higher patient load, expansion of clinic network, more specialist consultants as well as from International SOS (MC Holdings) and its subsidiaries (MCH). Excluding contribution from MCH, the group’s revenue was up 7.9%.

However, overall revenue growth was offset by higher staff costs as well as higher consumption of inventories and consumables. As a result, PATMI was up 4.0% to S$16.2m. 9M16 revenue of S$355.1m and PATMI of S$48.4m formed 74% and 65% of our full year estimates respectively, while we keep in mind that 4Q is typically a stronger quarter. Pending an analyst briefing later, maintain HOLD with fair value estimate of S$1.54.

Source: OCBC Research - 24 Oct 2016