Maybank Research Pte Ltd
April 23, 2025
Raffles Medical Group: Strong Immunity – Strategic Shanghai Collaboration Drives Target Price Increase
Executive Summary
Raffles Medical Group (RFMD SP) has recently forged a strategic agreement with an affiliate of Shanghai Jiao Tong University School of Medicine, signaling a new phase of collaboration between public hospitals and international medical groups. Maybank Research maintains a bullish outlook on RFMD, citing the company’s resilience amidst macroeconomic uncertainties due to its non-discretionary services and domestic demand strength. Consequently, the DCF-based target price (TP) is raised to SGD1.13, driven by a reduced Weighted Average Cost of Capital (WACC) of 7% (-0.5ppt) reflecting RFMD’s optimized capital structure. Key catalysts for further re-rating include higher-than-expected dividends and earnings growth, along with a faster turnaround of China operations. RFMD remains Maybank’s Top Pick in the Singapore healthcare sector with a BUY recommendation.
Strategic Collaboration with Renji Hospital
RFMD’s collaboration with Renji Hospital, an affiliate of Shanghai Jiao Tong University School of Medicine, aims to establish a “dual circulation” medical resource service system. This initiative seeks to advance collaborative development and promote Shanghai as an international medical tourism hub. The integration of RFMD’s international-standard service system with Renji’s Chinese medical expertise will be facilitated through RFMD’s global network. Two key initiatives will be launched:
- Renji International Cloud Clinic: Enabling cross-border telemedicine consultations with Renji physicians.
- Collaborative Activity: Joint efforts between the medical teams of both institutions.
China Operations on a Growth Trajectory
RFMD’s China hospitals are poised to continue their positive growth trajectory in terms of patient volumes and revenue (2H24: SGD34.8m, 1H24: SGD30.5m). This growth is underpinned by increased service offerings and community engagement efforts. Shanghai, in particular, has experienced steady growth in FY24 through partnerships with insurance companies and corporations to offer tailored healthcare packages. Despite potential competition from China’s new health policy allowing wholly-foreign-owned hospitals, RFMD remains optimistic about the substantial opportunities in the country, leveraging its growing brand recognition.
Management anticipates that its China operations will achieve EBITDA breakeven by the end of FY26, driven by the continued ramp-up of bed utilization.
Share Buyback Program
RFMD’s robust operating cash flow has enabled the group to update its dividend policy, committing to pay out at least 50% of core earnings annually. Furthermore, the company is committed to returning any excess capital (net of capex & M&As) to shareholders via special dividends. Since its Feb’25 pledge to buy back up to 100m shares over the next two years, RFMD has acquired 7.7m shares in the open market at an average cost of SGD0.98 (cumulatively holding 33.8m treasury shares). This ongoing share buyback program is expected to further optimize its capital structure, improve ROE, and achieve EPS accretion.
Company Statistics
Share Price: SGD 1.01
12m Price Target: SGD 1.13 (+12%)
Previous Price Target: SGD 1.03
Recommendation: BUY
Company Description: Raffles Medical owns and operates hospitals and medical clinics in the region.
- 52w high/low (SGD): 1.04/0.83
- 3m avg turnover (USDm): 2.1
- Free float (%): 54.8%
- Issued shares (m): 1,885
- Market capitalisation: SGD1.9B / USD1.5B
- Major shareholders: LOO CHOON YONG (3.3%), S&D Holdings Pte Ltd. (1.9%), Global Alpha Capital Management Ltd.
Price Performance
Absolute (%): -1M (1), -3M (21), -12M (1)
Relative to index (%): -1M (2), -3M (21), -12M (15)
Source: FactSet
Financial Highlights
| FYE Dec (SGD m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
707 |
752 |
767 |
779 |
791 |
| EBITDA |
153 |
124 |
133 |
138 |
144 |
| Core net profit |
90 |
62 |
67 |
71 |
74 |
| Core EPS (cts) |
4.9 |
3.3 |
3.6 |
3.8 |
4.0 |
| Core EPS growth (%) |
(36.4) |
(31.0) |
8.4 |
5.1 |
5.1 |
| Net DPS (cts) |
2.4 |
2.5 |
2.5 |
2.5 |
2.5 |
| Core P/E (x) |
22.2 |
25.4 |
27.8 |
26.5 |
25.2 |
| P/BV (x) |
2.0 |
1.5 |
1.8 |
1.7 |
1.7 |
| Net dividend yield (%) |
2.2 |
2.9 |
2.5 |
2.5 |
2.5 |
| ROAE (%) |
8.8 |
6.0 |
6.3 |
6.5 |
6.7 |
| ROAA (%) |
5.9 |
4.1 |
4.3 |
4.5 |
4.6 |
| EV/EBITDA (x) |
11.4 |
10.5 |
11.8 |
11.0 |
10.2 |
| Net gearing (%) |
net cash |
net cash |
net cash |
net cash |
net cash |
| Consensus net profit |
– |
– |
70 |
76 |
83 |
| MIBG vs. Consensus (%) |
– |
– |
(3.6) |
(7.0) |
(10.5) |
Peer Comparisons
| Company |
BBG Code |
MIBG Rec |
MIBG TP (LC) |
Price (LC) |
FYE mm/dd |
Mkt cap USDm |
P/E (x) Act |
P/E (x) FY1 |
P/E (x) FY2 |
P/E (x) FY3 |
EV/EBITDA (x) Act |
EV/EBITDA (x) FY1 |
Div yield (%) |
ROE (%) |
| Raffles Med |
RMFD SP |
Buy |
1.13 |
1.00 |
12 |
1,459 |
27.8 |
22.4 |
13.2 |
20.8 |
11.7 |
2.8 |
9.1 |
| Singapore listed peers |
| Q&M Dental |
QNM SP |
Hold |
0.31 |
0.29 |
12 |
215 |
18.7 |
14.5 |
11.6 |
9.7 |
8.0 |
3.4 |
17.0 |
| Thomson Medical |
TMC SP |
Hold |
0.05 |
0.04 |
06 |
851 |
85.6 |
82.4 |
67.5 |
57.0 |
19.5 |
107.3 |
49.1 |
| IHH Healthcare |
IHH MK |
Buy |
7.97 |
6.89 |
12 |
13,904 |
36.1 |
36.3 |
32.8 |
30.0 |
12.7 |
0.9 |
5.9 |
| Average |
|
|
|
|
|
|
49.8 |
47.0 |
37.8 |
35.9 |
13.0 |
37.0 |
20.3 |
| APAC ex- China peers |
| KPJ |
KPJ MK |
Buy |
3.00 |
2.71 |
12 |
2,807 |
35.7 |
27.1 |
23.4 |
20.8 |
12.6 |
1.9 |
– |
| BDMS |
BDMS TB |
NR |
– |
23.60 |
12 |
11,332 |
23.4 |
21.9 |
20.2 |
18.7 |
13.8 |
3.3 |
16.2 |
| BCH |
BCH TB |
NR |
– |
14.70 |
12 |
1,108 |
28.8 |
23.1 |
20.4 |
17.0 |
11.1 |
2.7 |
11.1 |
| Bumrungrad Hosp |
BH TB |
NR |
– |
170.50 |
12 |
4,096 |
19.0 |
18.3 |
17.7 |
17.0 |
12.3 |
3.0 |
23.9 |
| Chularat Hosp |
CHG TB |
NR |
– |
1.77 |
12 |
588 |
19.7 |
16.8 |
15.3 |
15.1 |
9.7 |
4.3 |
14.2 |
| Fortis Healthcare |
FORH IN |
NR |
– |
656.75 |
03 |
5,824 |
85.1 |
59.4 |
49.8 |
38.0 |
32.4 |
0.1 |
9.8 |
| Ramsay Health |
RHC AU |
NR |
– |
7,141 |
03 |
12,061 |
114.4 |
72.1 |
53.3 |
42.1 |
34.2 |
0.2 |
17.6 |
| PT Mitra Keluarga |
MIKA IJ |
NR |
– |
33.39 |
06 |
4,907 |
30.1 |
26.1 |
21.3 |
17.1 |
6.4 |
2.4 |
6.0 |
| PT Mitra Keluarga |
MIKA IJ |
Buy |
3000.00 |
2,310 |
12 |
1,958 |
28.2 |
26.0 |
23.3 |
21.0 |
15.1 |
1.8 |
– |
| PT Siloam Int’l |
SILO IJ |
Buy |
3500.00 |
2,120 |
12 |
1,641 |
30.5 |
18.6 |
16.3 |
14.9 |
7.5 |
1.2 |
15.2 |
| Average |
|
|
|
|
|
|
56.5 |
40.1 |
32.6 |
26.9 |
20.2 |
1.8 |
13.5 |
| China peers |
| China Resources Med |
1515 HK |
NR |
– |
3.49 |
12 |
583 |
7.2 |
7.1 |
6.9 |
6.7 |
2.7 |
4.0 |
8.9 |
| Aier Eye Hosp. |
300015 CH |
NR |
– |
12.87 |
12 |
16,470 |
35.8 |
32.6 |
28.9 |
25.3 |
18.4 |
1.2 |
16.7 |
| Topchoice Med |
600763 CH |
NR |
– |
42.54 |
12 |
2,611 |
38.2 |
36.0 |
32.0 |
27.7 |
19.7 |
0.4 |
12.1 |
| Average |
|
|
|
|
|
|
35.2 |
32.3 |
28.7 |
25.1 |
18.1 |
1.2 |
15.8 |
Source: Bloomberg, FactSet, Maybank IBG Research
DCF Valuation Model
| Items (SGDm) |
2025E |
2026E |
2027E |
2028E |
2029E |
2030E |
2031E |
2032E |
2033E |
2034E |
| Revenue |
767.0 |
778.9 |
791.0 |
803.4 |
816.1 |
829.1 |
842.3 |
855.9 |
869.8 |
884.0 |
| Growth |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
| EBIT |
88.6 |
93.4 |
98.3 |
103.1 |
108.1 |
113.2 |
118.5 |
123.8 |
129.3 |
135.0 |
| Growth |
-55% |
5% |
5% |
5% |
5% |
5% |
5% |
5% |
4% |
4% |
| Margin |
12% |
12% |
12% |
13% |
13% |
14% |
14% |
14% |
15% |
15% |
| add D&A |
42.8 |
43.5 |
44.3 |
45.1 |
45.8 |
46.6 |
47.4 |
48.2 |
49.0 |
49.7 |
| less tax paid & associates |
(26.1) |
(27.5) |
(28.9) |
(30.2) |
(31.6) |
(33.0) |
(34.4) |
(35.9) |
(37.4) |
(38.9) |
| less addition to WC |
2.2 |
0.8 |
0.8 |
0.8 |
0.8 |
0.9 |
0.9 |
0.9 |
0.9 |
0.9 |
| less capex |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
(20.0) |
| FCFF |
87.5 |
90.3 |
94.5 |
98.8 |
103.2 |
107.7 |
112.3 |
117.0 |
121.8 |
126.7 |
| Terminal value |
2111.5 |
| PV |
81.8 |
78.8 |
77.2 |
75.4 |
73.6 |
71.8 |
69.9 |
68.1 |
66.2 |
1137.8 |
| Total discounted FCF |
1800.5 |
| Less net debt |
287.7 |
| No. of shares outstanding (m) |
1,850.7 |
| TP |
1.13 |
| Implied P/E |
23.3 |
Source: Maybank IBG Research
Value Proposition
- Provides private medical services filling the gap between cheap-but-slow public services and fast-and-affordable private healthcare.
- Potential recovery in foreign patient volumes and elective procedures as border restrictions ease.
- China is expected to be the next long-term growth engine as the Singapore market becomes saturated.
Key Price Drivers
- Signed an MOU with China Taiping to jointly provide medical / healthcare insurance solutions.
- Opened Raffles Hospital Chongqing – a 700 bed hospital with GFA of more than 100,000 sqm.
- Signed MOU with China Life Insurance to provide medical services, and healthcare management/financing.
- Raffles Hospital Shanghai – a 400-bed tertiary hospital spanning 70,000 sqm officially opened in Pudong Qiatan.
Financial Metrics
- FY24 EPS fell due to the cessation of Covid-19-related services; however, improving patient volumes/ASP helped to offset some of the adverse impact.
- Strong balance sheet with a net cash position, enabling the group to maintain its core payout ratio of at least 50%.
- Capex should gradually revert to normalized levels with the completion of its Raffles Hospital Shanghai.
Swing Factors
Upside
- Faster-than-expected breakeven of new China hospitals.
- Cyclical recovery of foreign patient volumes.
- Stronger-than-expected EPS growth from higher revenue intensity, market share gains, etc.
Downside
- Further delay in EBITDA breakeven for Chongqing and Shanghai hospitals due to slowdown in China’s recovery.
- Loss of competitiveness of medical tourism in Singapore.
- Decline in domestic market share due to increased competitive pressures from both private and public hospitals.
ESG Assessment
Raffles Medical Group (RFMD SP) has an overall ESG score of 57.
Quantitative Parameters (Score: 50)
| Particulars |
Unit |
2022 |
2023 |
2024 |
KPJ MK |
| Scope 1 GHG emissions |
tCO2e |
N/A |
1,644.9 |
1,197.6 |
21,317.8 |
| Scope 2 GHG emissions |
tCO2e |
N/A |
17,489.2 |
16,999.7 |
141,631.9 |
| Total |
tCO2e |
N/A |
19,134.1 |
18,197.3 |
162,949.7 |
| Scope 3 GHG emissions |
tCO2e |
N/A |
N/A |
N/A |
9,548.6 |
| Total |
tCO2e |
N/A |
19,134.1 |
18,197.3 |
172,498.3 |
| GHG intensity (Scope 1 and 2) |
kgCO2e/t |
N/A |
N/A |
N/A |
86.0 |
| Electricity consumption intensity |
MWh/revenue |
0.3 |
0.4 |
0.4 |
0.2 |
| Water consumption intensity |
m3/revenue |
0.19 |
0.23 |
0.24 |
N/A |
| General waste (non-hazardous) consumption |
metric ton |
830.8 |
796.1 |
834.0 |
482.4 |
| Biohazard Waste |
metric ton |
2060.5 |
1748.5 |
1622.7 |
N/A |
| Paper recycling |
metric ton |
83.0 |
129.6 |
67.8 |
N/A |
| Metal recycling |
metric ton |
0.8 |
1.2 |
1.3 |
N/A |
| Food waste recycling |
metric ton |
N/A |
52.2 |
72.5 |
203.5 |
| % of women in workforce |
% |
75% |
75% |
76% |
75% |
| % of women in management |
% |
47% |
45% |
43% |
42% |
| Average training hours per employee |
hours |
19.3 |
18.3 |
18.3 |
39 |
| Employee volunteerism |
hours |
7176 |
796 |
1288 |
N/A |
| CEO/MD salary as % of reported net profit |
% |
N/A |
N/A |
11.8% |
1.5% |
| Board salary as % of reported net profit |
% |
1.7% |
2.4% |
2.8% |
1.4% |
| Independent directors on the Board |
% |
60% |
58% |
55% |
46% |
| Female directors on the Board |
% |
20% |
17% |
18% |
18% |
Qualitative Parameters (Score: 68)
- ESG Policy and Committee: Yes, with a committee responsible for monitoring and overseeing the group’s sustainability efforts and strategy.
- Senior Management Salary Linked to ESG Targets: No
- TCFD Framework for ESG Reporting: Yes
- Mechanism to Capture Scope 3 Emissions: No, but the company is preparing to track Scope 3 emissions.
- Key Carbon Mitigation/Water/Waste Management Strategies: Adopting technology and reducing usage of chemical treatment in cooling tower maintenance.
- Carbon Offset as Part of Net Zero/Carbon Neutrality Target: Yes
Target (Score: 60)
| Particulars |
Target |
Achieved |
| Reduce Scope 1 & 2 emissions |
5% |
5% |
| Reduce energy consumption |
5% |
1% |
| Reduce water consumption |
5% |
4% |
| Increase staff volunteering (hours) |
10% |
62% |
| Cybersecurity, data protection breach |
0 |
0 |
Overall Assessment
RFMD has an established framework, internal policies, and tangible mid/long-term targets but needs to make headway in improving its quantitative “E” metrics YoY. The group’s overall ESG score is 57, which makes its ESG rating as above average.
| ESG score |
Weights |
Scores |
Final Score |
| Quantitative |
50% |
50 |
25 |
| Qualitative |
25% |
68 |
17 |
| Target |
25% |
60 |
15 |
| Total |
57 |
Financial Statements
Key Metrics
| FYE 31 Dec |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| P/E (reported) (x) |
26.9 |
28.8 |
27.8 |
26.5 |
25.2 |
| Core P/E (x) |
22.2 |
25.4 |
27.8 |
26.5 |
25.2 |
| P/BV (x) |
2.0 |
1.5 |
1.8 |
1.7 |
1.7 |
| P/NTA (x) |
2.0 |
1.5 |
1.8 |
1.7 |
1.7 |
| Net dividend yield (%) |
2.2 |
2.9 |
2.5 |
2.5 |
2.5 |
| FCF yield (%) |
8.8 |
4.0 |
5.0 |
5.2 |
5.4 |
| EV/EBITDA (x) |
11.4 |
10.5 |
11.8 |
11.0 |
10.2 |
| EV/EBIT (x) |
15.1 |
15.8 |
17.8 |
16.3 |
14.9 |
Income Statement (SGD m)
| FYE 31 Dec |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
706.9 |
751.6 |
767.0 |
778.9 |
791.0 |
| EBITDA |
152.8 |
124.4 |
132.9 |
138.4 |
144.1 |
| Depreciation |
(35.5) |
(40.3) |
(42.8) |
(43.5) |
(44.3) |
| Amortisation |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
| EBIT |
115.8 |
82.5 |
88.6 |
93.4 |
98.3 |
| Net interest income /(exp) |
3.7 |
4.5 |
4.7 |
4.7 |
4.8 |
| Associates & JV |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Other pretax income |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Pretax profit |
119.4 |
87.0 |
93.3 |
98.1 |
103.1 |
| Income tax |
(28.3) |
(24.7) |
(26.1) |
(27.5) |
(28.9) |
| Minorities |
(0.9) |
(0.0) |
0.0 |
0.0 |
0.0 |
| Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Reported net profit |
90.2 |
62.2 |
67.2 |
70.6 |
74.3 |
| Core net profit |
90.2 |
62.2 |
67.2 |
70.6 |
74.3 |
Balance Sheet (SGD m)
| FYE 31 Dec |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Cash & Short Term Investments |
343.6 |
343.7 |
367.2 |
418.0 |
473.5 |
| Accounts receivable |
80.3 |
101.6 |
103.9 |
105.7 |
107.5 |
| Inventory |
12.5 |
10.8 |
11.1 |
11.2 |
11.4 |
| Reinsurance assets |
48.4 |
60.3 |
60.3 |
60.3 |
60.3 |
| Property, Plant & Equip (net) |
768.3 |
748.2 |
749.8 |
726.3 |
702.0 |
| Intangible assets |
18.8 |
15.5 |
15.5 |
15.5 |
15.5 |
| Investment in Associates & JVs |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Other assets |
256.4 |
250.7 |
250.7 |
250.7 |
250.7 |
| Total assets |
1,528.2 |
1,530.8 |
1,558.4 |
1,587.6 |
1,620.9 |
| ST interest bearing debt |
16.0 |
6.9 |
6.9 |
6.9 |
6.9 |
| Accounts payable |
210.7 |
218.5 |
223.3 |
226.1 |
228.9 |
| Insurance contract liabilities |
112.8 |
119.5 |
119.5 |
119.5 |
119.5 |
| LT interest bearing debt |
54.6 |
49.1 |
49.1 |
49.1 |
49.1 |
| Other liabilities |
90.0 |
72.0 |
75.0 |
77.0 |
81.0 |
| Total Liabilities |
484.4 |
465.8 |
473.3 |
479.1 |
485.1 |
| Shareholders Equity |
1,027.7 |
1,049.8 |
1,069.8 |
1,093.4 |
1,120.5 |
| Minority Interest |
16.1 |
15.2 |
15.2 |
15.2 |
15.2 |
| Total shareholder equity |
1,043.9 |
1,065.0 |
1,085.0 |
1,108.6 |
1,135.7 |
| Total liabilities and equity |
1,528.2 |
1,530.8 |
1,558.4 |
1,587.6 |
1,620.9 |
Cash Flow (SGD m)
| FYE 31 Dec |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Pretax profit |
119.4 |
87.0 |
93.3 |
98.1 |
103.1 |
| Depreciation & amortisation |
37.0 |
41.9 |
44.3 |
45.0 |
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