Raffles Medical Group’s (RMG) 1Q18 results were broadly in-line with our expectations. Revenue increased 4.6% YoY to S$120.2m, while PATMI rose 1.7% YoY to S$15.8m. These constituted 23.7% and 23.3% of our full-year expectations, respectively.

In terms of its segments, revenue from the Healthcare Services division and Hospital Services division both grew by 6.8% and 4.2% YoY, respectively. Higher expenditure in inventories, depreciation and staff costs were recorded in light of the group’s expansion of medical centres and beds.

Raffles Hospital is currently undergoing refurbishment to open up new wards, with the relocation and expansion of 15 specialist centres to the new Raffles Specialist Centre.

Plans for the group’s overseas hospitals appear to be on track, with Raffles Hospital Chongqing and Raffles Hospital Shanghai slated for opening in 4Q17 and 2H18, respectively.

We maintain our BUY rating but put our fair value estimate of S$1.26 under review.

Source: OCBC Research - 30 Apr 2018