Raffles Medical - RHB Invest 2020-04-27: Not A Vaccine To The Pandemic

RAFFLES MEDICAL GROUP LTD (SGX:BSL) | SGinvestors.io RAFFLES MEDICAL GROUP LTD (SGX:BSL)

Raffles Medical - Not A Vaccine To The Pandemic

  • Maintain NEUTRAL with a new SGD0.93 Target Price from SGD0.96, 7% upside and 3% yield.
  • Raffles Medical (SGX:BSL)'s 1Q20 net profit was down 45% y-o-y to SGD7.5m. We believe Singapore’s recent COVID-19 escalation will continue to hit Raffles Medical’s 2Q20 operations, as both medical tourism and local patient numbers decline amid border closures and the circuit breaker measures.
  • For its China operations, clinics previously instructed to close have reopened, but we now expect a longer turnaround period for the group’s hospital in Chongqing.



Raffles Medical's 1Q20 earnings were hurt by COVID-19.

  • Raffles Medical's revenue for the quarter was flat y-o-y at SGD128m, while EBITDA declined 13% y-o-y to SGD20.1m. See Raffles Medical Announcements. Net profit fell 45% y-o-y to SGD7.5m. This was largely in line with our expectations, as Raffles Medical’s hospital operations were impacted by a declining foreign patient load and elective patients deferring treatments since the start of the pandemic.
  • Some of the group’s clinics in China were instructed to close during this period, while Raffles Hospital Chongqing could only operate with a significantly smaller patient load.
  • We believe revenue remained flat, as Raffles Medical could be propped up by an increase in insurance contracts and other services, such as temperature screenings and Emergency Care Collaboration with the Health Ministry.


Outlook remains cloudy for now.

  • While China has begun its recovery, the number of COVID-19 cases in Singapore has escalated since end March. As a result, we project 2Q20 earnings to be muted as well.
  • We do not expect a sharp recovery in hospital patient loads, even after the country’s circuit breaker measures are expected to be lifted on 2 Jun. This is because foreign patients are likely to continue avoiding COVID-19-affected regions while elective patients may choose to defer treatments for as long as possible.


Not a vaccine to the pandemic.






Juliana Cai CFA RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-04-27
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 0.960 DOWN 0.93



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