As a leading integrated private healthcare provider operating in 14 cities across Asia, Raffles Medical aims to capture further growth from the Chinese healthcare market, where it has opened the Raffles Chongqing hospital in January 2019 and plans to open Raffles Shanghai hospital in 2Q 2021. Momentum at its Chongqing hospital should continue improving with EBITDA breakeven likely in FY22E.

In its FY20 results update, management provided a more upbeat guidance for the group’s recovery prospects, with potential pick up in foreign patients expected later this year which should offset  a potential fall in contribution from pandemic related support services in Singapore as vaccinations progress and regional economies normalize further.

The company has guided for FY21E dividends (transition year) to be minimally on par with FY20’s 2.5 cents/share, and will consolidate its dividends thereafter into an annual core dividend up to half its average sustainable dividend. BUY.

Source: OCBC Research - 24 Feb 2021