Strong SG dollar to drag Raffles Medical’s recovery in H2

The private hospital group will see downside risks from lower TCF contributions. 

The strong Singaporean dollar against regional currencies is going to drag Raffles Medical Group’s (RMG) hospital services recovery in the remaining half of 2023, UOBKayHian said.

In a brokerage report, the online broker said they see downside risks to their earnings estimate for RMG due to a “combination of higher-than-expected COVID-19-related revenue, lower TCF contributions, and increased contributions from the lower-margin core clinic segment.” 

“We now expect 2H23 PATMI to fall 45.2% yoy and 23.2% hoh respectively (-41.5% yoy and -18.0% hoh previously) to S$46m,” read the report.

UOBKayHian said the RMG’s TCF was “starkly lower” from its estimates of S$110m-$120m to $30m-$35m.

Meanwhile, RMG will expand into Vietnam with a recent majority stake acquisition and its CHangi TCF has been prolonged until February 2025.