Analysis on Raffles Medical Group

On 20 February 2017, Raffles Medical Group announced a record revenue of S$473.6 million for the year ended 2016, demonstrating its ability to maintain growth amid challenging economy. The result was impressive because it presented a 15.4% growth from 2015, driven by positive contributions from all business divisions.

Investment moats

Raffles Medical Group is one of my favorite stocks which I am not vested in but am constantly monitoring its progress for future investment purposes. Being one of the leading private healthcare service providers in Singapore, this company sets itself apart from the rest of its competitors with its strong investment moats.

Raffles Medical boosts RafflesHospital as its flagship, offering a wide range of specialist medical and diagnostic services for both inpatients and outpatients. Raffles Medical clinics form one of the largest networks of private family medicine centres in Singapore while RafflesDental is a team-based dental group in Singapore comprising of a specialist dental practice at Raffles Hospital and a network of general dental clinics. RafflesHealthinsurance provides healthcare insurance to corporate and individual clients.

Raffles Medical

However, Singapore market is too small and with local competition heating up over the past few years, it is inevitable for Raffles Medical to expand overseas to seek growth. After all, with so many players from the public and private sectors, how many Singapore patients can RMG rely on to spur growth?

The Group’s acquisition of 55% equity interest in International SOS (MC Holdings) Pte Ltd (MCH) for a cash consideration of $32,661,000 in 2015 elevated it into a regional healthcare provider with clinical facilities serving patients in thirteen cities across Asia. This is a strategic move that resulted in the 15.4% revenue growth seen in 2016. Excluding the revenue contribution from MCH, the Group’s revenue would have grown by only 7.5%.

BullionStar

Scaling for growth

One thing about the Singapore healthcare sector is that it is heavily regulated (for good reasons too), thus this represents a high entry-barrier for many new entrants. But the business model is also scalable through opening or acquisition of clinics. Raffles Medical’s management clearly leverage on this and make it into a significant competitive advantage.

In 2016, Raffles Medical [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: December 31, 2019 — 1:39 pm

12 Comments

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  1. I read your blog very frequently and I really enjoyed them! Good job! look forward to your next post! i would like to which stock and stock price you have purchased previously?

    thank you!

  2. Are you sure shares trading at S$1.40 could come down to S$0.60..?

  3. Well said. with so many unsuitability in market, RMG is one of which that im willing and feel safe to hold regardless the market fluctuation. I believe the management of RMG is doing an excellent job compared to its peer by making it from a small clinic to what it is today. An organization must have the togetherness spirit to sail further. & only a capable management could lead the boat.

  4. I am patient to wait for a crisis and bargain buy this counter.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  5. Hi Xin,

    Thank you for your comments!
    I have sold off all my stocks. The last one I bought was K1 Ventures two years ago.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  6. is $0.60 a misprint or is it your genuine target price

  7. $0.60 ????????????

  8. Must be a misprint lah.

  9. Unlikely to be lower than 90cts unless world markets fall drastically

  10. Hi Wang,

    I don’t know but the current trend is bearish. I don’t mind waiting for the stock price to continue dropping.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

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