It could deliver a 27% net profit growth this year.
Raffles Medical Group is entering another era of growth this 2017, as its medical centres is seen to manifest improved profitability and higher patient load factor is expected with the Raffles Hospital extension.
According to RHB Research, Raffles Medical is to deliver a solid net profit growth of 27% in 2017, aided by a boost from rental income at Raffles Holland V mall. Around 95% of the space has been committed already by the end of 2016.
"We expect majority of the tenants to move in by 1Q17. Virgin Active gym, which took up more than one floor of space, is set to open in Apr 2017. We believe the opening of the gym would bring more foot traffic to that mall," the research firm noted.
It added, "In addition, operations of its new medical centres are improving. We expect operating profitability of the medical centres at Raffles Orchard and Raffles Holland V to turnaround in 2017 while International SOS is also expected to deliver a higher contribution."
Meanwhile, the ageing population and increased number of medical insurance are also set to drive growth for the group.
"Being one of the largest private medical groups in Singapore, we expect Raffles Medical Group (Raffles Medical) to benefit from Singapore’s ageing population as well as an increased sophistication in medical insurance plans. An ageing population and increased number of medical insurance policyholders would also support the resiliency of private healthcare spending in Singapore," RHB noted.
RHB believes that the long-awaited Raffles Hospital extension would lead to a higher patient load factor by the end of this year.
"We understand that the Group is trying to expand its team of international specialists as well. We believe that progress in its plan to expand (for new hospitals) in Beijing or Shenzhen would be a positive catalyst to the share price," the firm stated.
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