What a sensational return for Raffles Medical share price. The share price of the private healthcare provider was hit badly during the peak of the COVID-19 pandemic outbreak. Like many SGX stocks, Raffles Medical share price exploded to a low of $0.73 on 23 March 2020. Subsequently, the epic USD2 trillion massive fiscal stimulus by US government and the four Singapore Budgets helped to shore up market confidence. These events led to the revival of Raffles Medical share price.
Despite being in the healthcare sector, Raffles Medical share price did not surge during the COVID-19 pandemic like what shares of Riverstone and Top Glove did. Instead, Raffles Medical share price fell like the rest of its peers (Parkway Life REIT and First REIT). The reason for the decline of share price of hospital operators is because the COVID-19 pandemic resulted in countries being locked down, thereby affecting patient loads.
Raffles Medical share price was particularly affected by the COVID-19 because it owns two hospitals in China, the original epi-centre of the outbreak. Some of their clinics in China were forced to close by the authorities while its Chongqing hospital has to operate with a significantly smaller patient load due to the lockdowns. In Singapore, the government has barred foreign visitors from coming to Singapore to seek medical treatment.
To rub salt into injury, there is a lot of uncertainties concerning the opening of its Shanghai Hospital. In February, the management updated that “preparations are on track to enable RafflesHospital Shanghai to be ready for operations. However, in view of the COVID-19 situation, the actual date of commencement of operations will depend on when Shanghai returns to normalcy”. The uncertainties of the commencement of Shanghai Hospital, coupled with the start-up losses, will likely to weigh on Raffles Medical share price.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Raffles Medical before. Whether Raffles Medical share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Raffles Medical share price in royal battle
In Singapore, Raffles Medical’s competitor is Parkway Life REIT, which consisted of three private hospitals in Mount Elizabeth, Gleneagles and Parkway East. The fierce competition for a piece of market share in the medical tourism had led to the bearish form of Raffles Medical share price in recent years. While Parkway Life unit price had ruled the market, Raffles Medical share price fell off the cliff.
Although Raffles Medical has a network of medical clinics in ASEAN cities to compete with Parkway Life REIT, the biggest margins come from the hospital services. Thus, this is the competitive edge that the management would want to leverage in the battle. Previously, Raffles Medical had focused on mergers and acquisitions of clinics in foreign countries. But data shown that revenue [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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