In a report released yesterday, Llelleythan Tan from UOB Kay Hian downgraded Raffles Medical Group (RAFLF – Research Report) to a Hold, with a price target of S$1.15.
Llelleythan Tan has given his Hold rating due to a combination of factors affecting Raffles Medical Group’s financial performance. Firstly, the company’s third quarter net profit for 2023 significantly dropped 67.4% year-on-year, largely due to the lack of revenue from COVID-19 related services, a surge in insurance claims, and increasing operating costs. The company’s profit margins have also been squeezed due to competitive bidding.
Furthermore, Tan anticipates that the company’s margins will continue to shrink due to the burgeoning losses from its operations in China, increasing insurance claims, and elevated operating costs. The company’s revenue is also expected to weaken further in the fourth quarter of 2023 due to the decreasing COVID-19 related revenue. Additionally, the competitive labour market in Australia and New Zealand is likely to maintain pressure on manpower costs. The extension of transitional care facility operations, through a competitive tender, is also likely to further erode profit margins.
According to TipRanks, Tan is an analyst with an average return of -8.4% and a 22.22% success rate.
In another report released today, Phillip Securities also downgraded the stock to a Hold with a S$1.02 price target.
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Raffles Medical Group (RAFLF) Company Description:
Raffles Medical Group Ltd. is an investment holding company, which engages in the operation of medical clinics and other general medical services. It operates through the following segments: Healthcare Services, Hospital Services, and Investment Holdings. The Healthcare Services segment includes the management of medical clinics and other general medical services, provision of health insurance, trading in pharmaceutical and nutraceutical products and diagnostic equipment, and provision of management and consultancy services. The Hospital Services segment provides specialized medical services and operates hospital and business of medical laboratory and imaging center. The Investment Holdings segment refers to the investment properties. The company was founded by Choon Yong Loo and Alfred Loh in 1976 and is headquartered in Singapore.
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