Raffles Medical Group immune to slowing medical tourism

No decline in foreign patients seen as new wing nears completion.

With two new medical centres ramping up and two new hospitals coming on-stream over the next two years, RHB believes Raffles Medical’s growth potential is becoming exciting once again.

"We expect EPS to increase at a 16.6% CAGR over FY15-18, on the back of higher capacity," said RHB in a research note.

According to RHB, hospital services in Singapore continued to register mid-single digit growth. Raffles Hospital has not seen a decline in its foreign patient load despite intensifying competition from neighbouring countries and the SGD appreciating against regional currencies.

Moreover, RHB said that its hospital is operating at an optimal utilisation rate of 70%. Thus, it expects its patient load to grow when the construction of the Raffles Hospital extension is completed in 1H17.

Moving forward, the brokerage firm expects Raffles Medical to perform better in FY17F on back of better cost structure in newly-acquired International SOS, a healthcare provider with 10 clinics across China, Vietnam and Cambodia; ramping-up of its medical centres at Orchard Road and Holland V Road, and; higher margins stemming from the increased focus on specialised medical services in Hong Kong.

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