Raffles Medical Group - RHB Invest 2019-07-29: Cost Management Offset Soft Revenue In 1H19

RAFFLES MEDICAL GROUP LTD (SGX:BSL)

Raffles Medical Group - Cost Management Offset Soft Revenue In 1H19

Maintain NEUTRAL with unchanged Target Price of SGD1.02, 0% downside plus 2.4% dividend yield.
RAFFLES MEDICAL GROUP (SGX:BSL)'s 2Q19 results met our estimates, with 1H19 PATMI of SGD27.9m representing 47% of our full-year estimates. 2H19 should be seasonally stronger.
The 6% y-o-y growth in 1H19 revenue was a tad slower than our expectation, but this was offset by better cost management at its Chongqing hospital.

Raffles Medical Group's 1H19 interim dividend was maintained at 0.5 cents/share.

Raffles Medical Group's 2Q19 revenue grew 6% y-o-y to SGD127m, driven by 7.4% growth in Healthcare services and 3.4% growth in Hospital services. This brought 1H19 revenue to SGD255m, up SGD15m y-o-y.
Earlier, during the 1Q19 results briefing, management guided for the Chongqing hospital to reach SGD30-40m in revenue for the first year. As such, we think the 1H19 revenue growth of SGD15m y-o-y, inclusive of both Singapore and Chongqing operations, seems to be on the low side.
In Singapore, Raffles Hospital saw patient load grew by c.1-2%, largely driven by local patients while the foreign patient load remains flat. Healthcare services continued to grow, as the group continued to sign on more corporate clients and expand its medical centres’ footprint in China.

This was due to Chongqing year of operations.
Despite slower line due to better staff expenses continue to patient load at RHCQ in 2H19.

Shanghai of the year, and next year.
In view of the new Shanghai up next year, we maintain our NEUTRAL call on Price of SGD1.02.
A faster-than-expected ramp up at its China hospitals would be a key catalyst to Raffles Medical Group's share price, in our view.

Juliana Cai CFA RHB Securities Research | https://www.rhbinvest.com.sg/ 2019-07-29

SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 1.020 SAME 1.020