1H22 Results Analysis: Another record breaking results post reopening
- Record high 1H22 results saw PATMI +51% y-o-y to S$60m despite the tapering off of contributions form COVID-19 related services, above our estimates
- Key positives: i) return of foreign patients could likely conitnue, ii) both healthcare and hospital services revenue are above pre-COVID
- Key negatives to watch: i) China operations were impacted due to the lockdown but should return to normalcy as the COVID situation ease.
- Maintain BUY rating; TP of S$1.63
Record high 1H22 results despite tapering off of contributions from COVID-19 related services following the return of foreign patients
- Raffles Medical’s 1H22 PATMI grew 51%y-o-y (+34% h-o-h) to S$60m, above our estimates, recording one of its best half-yearly results. Despite the tapering off of contributions from COVID-19 related services, the record high results were led by return of patient volumes from both local and foreign patients.
- 1H22 Revenue grew 11% y-o-y to S$382m led by growth in healthcare services (+24.1% y-o-y) but hospitals services fell 11.4% y-o-y due to lower PCR diagnostic tests carried out.
- More importantly, we note that healthcare services has doubled that of pre-COVID (1H19 revenue) while hospital services is back to pre-COVID levels.
- Similar trends observed, 1H22 EBTIDA +43.5% y-o-y to S$107m.
- 1H21 EBITDA margins expanded to 28%, highest EBITDA margins achieved.
- 1H21 revenue from Singapore and Greater China grew 11% y-o-y and 5% y-o-y respectively while the rest of Asia grew 22% y-o-y.
Key business updates / highlights
Foreign patients returning to Singapore could likely continue; China impacted by lockdown but should return to normalcy with the easing of COVID situation in China; approval to setup an IVF centre at Hainan.
- In Singapore, despite COVID-19 support activities in the areas of stand-alone vaccination and PCR test centres have tapered off, Raffles Medical continue to support the government’s COVID-19 initiatives such as i) operating combined testing and vaccination centres in two locations in Singapore, ii) operate community treatment facilities which has evolved to offer step-down care for COVID-19 positive patients ahead of discharge from hospital.
- With travel borders reopening, foreign patients have returned to Singapore but Raffles remain cautiously optimistic that foreign patients will continue.
- In China, the three hospitals were impacted by the lockdowns in China with RafflesHospitalShanghai, which opened in Jul21 was the most impacted. All hospitals were operational despite the lockdowns but faced constraints as staff and patients could not travel to the hospital. Raffles continues to participate in the government’s COVID-19 vaccination and community testing efforts given the continued sporadic COVID-19 clusters.
- Raffles expect the COVID situation in China will likely ease in the coming months and the Group’s China business can return to normalcy.
- Received the approval to set up an IVF / Assisted Reproductive Therapy centre at Le Cheng, Hainan, China.
More details after the briefing.