Raffles Medical Group’s 1Q19 results were within our expectations. Top-line grew 6.7% YoY to S$129.3m, with revenue from the Healthcare Services division and Hospital Services division growing 8.9% and 3.2% YoY, respectively.

For the group’s Healthcare services division, increased contribution came mainly from increase in premium from existing and new clients, the Primary Care Network Scheme and projects. On the Hospital Services front, 1Q19 saw higher utilisation of inpatient capacities.

PATMI fell 13.7% YoY to S$13.6m, which constitutes 22.5% of our full-year forecast (1Q18: 22.3% of FY18 PATMI). The implied EBITDA loss from Chongqing came up to S$1.8m, while PAT would have grown by 2.1% instead of the 11.2% registered for the quarter.

As a recap, management has guided for EBITDA losses of S$8-10m for the 1st year of hospital operations in Chongqing. We maintain our BUY rating but place our fair value estimate of S$1.25 under review.

Source: OCBC Research - 29 Apr 2019