While the results may have missed some analysts’ expectations, they have overall remained quite positive on the stock, as they expect the group’s China business to see growth. During the first half period, the China business saw a marginal revenue increment from RMB162.9 million ($30.5 million) to RMB163.6 million. Cost-saving measures that were put in place earlier have proven effective in reducing initial losses.
UOB Kay Hian and DBS are the most positive ones as they kept their “buy” calls and raised target prices to $1.25 (from $1.18) and $1.32 (from $1.12), respectively.
The way UOB Kay Hian analysts Roy Chen and Heido Mo see it, the group’s results were a slight miss, although there was overall revenue and patmi growth.
On the outlook, the two analysts are positive across all segments. They expect the growth in the healthcare services segment to moderate, driven by healthy underlying demand; hospital operations to see improved margins on better cost discipline; China operations to hopefully break even at ebitda level in 2026; and the insurance services to further pare down losses in 2HFY2025.
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“Given the unchanged turnaround expectations for its China hospital operations, RMG’s valuation should remain supported by upbeat market sentiments thanks to the MAS Equity Market Development Programme. As such, we recommend investors stay invested with Raffles Medical,” say Chen and Mo.
As for DBS, analysts Amanda Tan and Andy Sim also see the China growth story as “worth the long shot”. They expect the improvement in the group’s overall profitability to be driven by lower gestational losses in China and better operating leverage in the insurance business.
Apart from its business growth strategies, the group has also revised its dividend policy to at least 50% of sustainable earnings annually, paying out 70% last year. It has also put in place a share buyback scheme, where it intends to purchase 100 million (or 5.3%) of its shares over the next two years to support the share price. So far, it has only bought back about 7.7 million shares at $7.5 million.
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Staying healthy
For Maybank and CGS International (CGSI), they have kept their “buy” and “add” calls, while keeping their target prices of $1.13 and $1.20, respectively.
On reiterating his call and target price, Maybank analyst Eric Ong says: “We deem the results broadly within market expectations at about 48% and 46% of our and street’s full year estimates, respectively, given the seasonally stronger second half.”
While unexciting in the near term, Ong continues to like the stock’s defensiveness, embedded with an option on its China exposure.
Looking ahead, the group will focus on improving operating margins by optimising resource utilisation, streamlining care delivery processes and driving speciality-driven services across its facilities.
CGSI also shares similar sentiments. Analyst Tay Wee Kuang says, “We reiterate our ‘add’ call with our forecasts intact as we believe RMG will see y-o-y and h-o-h net profit growth, albeit modest, in 2HFY2025.”
He is also upbeat on the group’s partnership and collaboration efforts with local hospitals in China, which support reputation building. “Management said these collaborations will allow local patients to opt to receive healthcare services in RMG’s gestating hospitals with a visiting doctor from the partnered hospitals, which can help to build its reputation among locals in China and improve its bed utilisation in the country,” says Tay.
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During the results briefing, RMG CEO Dr Loo Choon Yong shared that these partnerships will not result in near-term profit gains, but will support long-term growth. “We won’t see an immediate and big revenue and profit bump. But over time, the partner doctors and our doctors will be able to take care of more patients,” he says, and this will eventually be translated into higher revenue.
Limited near-term catalysts
RHB, on the other hand, is less bullish on RMG as it has downgraded its call to “neutral” from “buy”, but increased the target price to $1.10 from $1.08.
Although 2HFY2025 is expected to be seasonally stronger, the group’s current valuation, which is comparable to regional peers, already reflects mid-teens profit growth, according to analyst Shekhar Jaiswal. He adds: “While ex-cash P/E is attractive, the absence of special dividends or major mergers and acquisitions limits near-term catalysts. Long-term outlook remains positive, supported by steady revenue growth in Singapore and China, and progress towards ebitda breakeven in China.”
Foreign patient volume in Singapore remained weak due to the strong SGD and rising competition from Malaysia and Thailand. The group will gradually reduce its 176 Transitional Care Facility (TCF) beds at its hospital from 2026 and is exploring alternative uses. “We see the potential to boost hospital earnings from 2026,” says Jaiswal, while adding that staff costs are expected to rise and the group will gradually adjust pricing to counter the cost increase.
Outside of Singapore, China operations remain on track for ebitda breakeven in FY2026, while the Vietnam acquisition is pending government approvals and Indonesia is being explored for expansion. Jaiswal notes that the Johor-Singapore Special Economic Zone presents opportunities for outpatient growth and back-office cost savings.
The group expects insurance losses to decline, supported by a new CEO appointment in its insurance services segment and the setup of an in-house third-party administrator.
