Raffles Medical Group’s 3Q18 results were in-line with our expectations. Revenue grew 1.2% YoY to S$121.0m, on the back of a 8.0% YoY revenue increase from the group’s Healthcare Services division, due to the addition of new corporate clients and the new contract to provide Air Borders screening services.

This compensated for the 3.8% YoY revenue decline from its Hospital Services division, which was due in part to the refurbishment of the current inpatient facilities.

We note that Raffles Hospital opened a new inpatient ward in 3Q18, catering to patient needs under the Emergency Care Collaboration with the Ministry of Health. We expect further renovation works in 4Q18 to add more inpatient facilities.

PATMI for the quarter grew 0.1% YoY to S$16.4m, forming 24.2% of our full-year forecast. We deem this set of results to be broadly within expectations.

Pending an analyst briefing, we maintain our BUY rating, but place our FV estimate of S$1.26 under review.

Source: OCBC Research - 29 Oct 2018