Raffles Medical’s ramp-up in revenue in China slower than expected

The hospital’s gestation losses from China cities will likely persist.

One of the largest private healthcare in Singapore, Raffles Medical Group, will experience persistent weak earnings beyond the year, RHB said in its brokerage report.

“We earlier expected the gestation losses from China to be offset by improving Singaporean operations. However, Singapore's weak margins amid higher operating costs, elevated insurance claims, and a lower foreign patient load would likely persist,” said RHB.

We cut our FY23-25E profit by 24-25% and see limited near-term rerating catalysts, while relative valuations remain compelling.

Whilst Raffles Medical Group noted that revenue from China operations improved, the ramp-up in revenue was slower than expected. 

Operations in Beijing remained profitable but the gestation losses from its Shanghai and Chongqing hospitals are likely to persist. 

“It has commenced right-sizing and rationalising the China operations to achieve better-operating efficiencies by redeploying some of its medical staff between Chongqing and Shanghai for training purposes and to cater to specialities with higher demand,” read the report.