4 reasons why this year will work in favour of Raffles Medical

It is set to ramp up the Orchard Medical Centre.

With Singapore's healthcare sector harnessing structural growth drivers like rising affluence, an ageing population, and growing medical tourism, analysts see Raffles Medical Group taking this year with much optimism.

According to Maybank KimEng, Raffles Medical should look out for the ramping up of Orchard Medical Centre.

"Started in Jun 2015, the project is improving and is expected to turn profitable within the next two quarters. Also, adjustments of various specialties should improve results," the firm said.

Meanwhile, there is also an upside expected in the rental income from new Holland Village Mall.

"Completed in Mar 2016, tenant demand for the project has been encouraging. 95% of the space has been committed as of Oct 2016. We expect rental revenue of $5.6m in 2017," Maybank explained.

More so, the group should also expect lower earnings drag from MCH as restructuring has been completed and operations start to ramp up. Maybank stated that the multi-clinic group was acquired in Oct 2015 to enhance its overseas presence. The rebranding and restructuring exercises dragged its earnings by around $2m in 2016.

And lastly, the completion of Raffles Hospital extension in late-2017, the brokerage firm noted, could enable scaling up of operations and rental income from unutilised space.

"What could change our view: ramp up of Orchard Medical Centre delayed; restructuring results and ramp up of MCH slower than anticipated; progress of Raffles Hospital extension and China expansion slower than expected," it argued.

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