(Stocks Discussion) SGX: Raffles Medical Group Ltd (SGX: BSL)? - Seedly
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Asked on 17 Apr 2019

(Stocks Discussion) SGX: Raffles Medical Group Ltd (SGX: BSL)?

Discuss anything about share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment!


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Jonathan Ang
Jonathan Ang
Level 7. Grand Master
Answered on 08 Dec 2019

1) margins declining steadily, a really bad sign. Shows that they have decreasing pricing power.

This is the problem with business that scale but can't have pricing power.

So in 2013, with only 341mil of sales, they were able to generate 85 mil in net profit.

Fast forward to 2018, despite having higher revenues of 489 mil, you would expect them to make more money. But they only made 71 million in profits.

They would have been better off without growing. A bit ironic sometimes haha.. This happens for business model that need to inccur incremental cost by growing their revenues.

But compare this to a tech company like Microsoft.. they don't have to spend much money by selling 1 more person the microsoft software.


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Wallace Chai
Wallace Chai
Level 9. God of Wisdom
Answered on 07 Dec 2019

In order for them to scalem they need to get more doctors. This is the bottleneck for them. How much can one person make and contribute? If the doctors decided to leave the group, the revenue will be negatively impacted.


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Isaac Chan
Isaac Chan, Business at NUS
Level 8. Wizard
Updated on 21 May 2019

TL;DR Revenue growth has slowed down due to saturated private healthcare industry in Singapore. Growth in China have not reached their earnings potential yet, but such potential could be reached in the future.

Business Profile

Source: BrightSparks

Raffles Medical is quite famous in Singapore, being recognised as one of the premium healthcare services in Singapore. They own and operates a network of family medical clinics, a tertiary care hospital, insurance services and a consumer healthcare division. The clinic was first founded in 1976. But today, they serve more than one million patients today and over 6,500 corporate clients.


Source: Raffles Medical Group Annual Report 2018

Income Statement

YOY financials look quite similar, with net profit increasing by 3%. This is because YOY revenue and expenditures hardly changed much. Revenue seems to be fairly split between hospital and healthcare services.

Over the past few years, revenue have not grown much due to saturation in the Singapore market. This should not be surprising, since Singapore has a small population, and healthcare is not a consumer product which can be consumed repeatedly. (you won’t visit the doctor for nothing) Hence, overall market size revenue for Singapore can’t grow much.

Finance expenses did experience a significant proportionate increase YOY due to more debt being taken on. As the firm expands into China, more revenue growth can be expected.

Balance Sheet

Current ratio is slightly more than 1, which shows that short-term liquidity isn’t very strong. Based on a leverage ratio (Debt/Equity) of 0.14, the business seems properly leveraged, with potential for taking on more debt to fund overseas expansion at a lower cost of debt. The Net Deb/EBITDA ratio is also extremely low, which reinforces the well-leverage position. Interest coverage ratio (EBITDA/finance costs) is also very low at almost 100X.


Cashflow from operating activities actually improved due to better working capital management. Cashflow from operating activities is driven by high net profit and profitability.

Cashflow from investing activities were due to lesser payment for investment properties. However, cashflow used for capital expenditures and investments overseas are almost equal due to cashflow not being strong yet from overseas properties.

Cashflow from financing activities experienced both huge inflows and outflows due to new debt being taken on and older debt being repaid.

Overall Free Cashflow is actually negative due to huge investment activities overseas. However, these investments should pay-off, such that future free cashflow should be strong.

Dividend payout ratio is about 22%. However, due to large expansionary measures and a negative free cashflow, dividends paid out may not be able to be sustained in the long run.

Growth Potential

China Expansion

Source: Nikkei Asian Review

With greater expansion in China, there could be a strong potential for earnings to rise over the years. China has one of the fastest growing middle-class populations in the world. As such, demand for private health-care has been rising fast. Additionally, the standard of service should be similar to that of Singapore, since the doctors and staff will be trained in Singapore.

Stable Core Business

Source: Raffles Medical Group

With a stable operating cashflow of more than $70m a year, this shows that the firm generates healthy cashflow to run operations. Moreover, their business in Singapore can be considered mature, and should not be disrupted in the near future. I also believe that they are the market leader, and have quite a defensible market position over the rest.


Staff costs

Staff costs account for close to half of the group's revenue. Shortages in healthcare professionals could result in higher staff costs that can put downward pressure on earnings. Training costs for doctors in China could also be higher, especially due to cultural differences that might exist.

Economic Conditions

A potential economic downturn could affect revenue more significantly since Raffles Medical is considered more of a premium service. Hence, patients may choose to patronise public hospitals or cheaper clinics if Singapore is especially hit with a recession.


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Level 7. Grand Master
Answered on 07 Dec 2019

I am looking for their China businesses to pick up! ​​​


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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Updated on 20 Dec 2019

Raffles Medical (SGX:BSL) is perhaps one of the most well-known and largest private medical companies in Singapore. Its brand is synonymous with Raffles Hospital situated in Bugis as well as the Raffles Clinics. In the medical line, the reputation of the hospital is vital and acts as a natural moat. Raffles Medical (RM) has done so by establishing its brand name in the private medical market. It currently operates primarily in 2 countries – Singapore and China. As part of its expansion in Singapore,

  • RM recently opened a new centre in Holland Village in 2016 and

  • A new wing for the specialist center at its Bugis Hospital branch.

  • Has businesses in other SEA countries.


Based on full year results:

  • Raffles has a reported earnings-per-share of 4 cents and a dividend of 2.25 cents

  • From a current price of $1.13 (as of 5 Oct 2018), it points to a 28x PE and a fairly low dividend yield of 2%.

However, it is worth noting that Raffles Medical is very very conservative. Its dividends are sustainable, with the company capping it at below 75% of its payout ratios, unlike Singapore Telecos who pays higher than 75%. Figure 1: Raffles Medical Past 5 year results (Source: Annual Report) From a cash flow analysis, Raffles Medical has always been paying its dividends out of free cash flow generated by its businesses.

Future growth in Singapore

Raffles Medical has refurbished its flagship hospital in Singapore with a specialist centre. This has led to the increase in the Bugis hospital capacity. With the Ministry of Health (MOH) making it more expensive for foreigners to be referred to public hospitals, and given the Raffles Hospital Branding, the increase in its hospital capacity should be filled. Secondly, RM has been granted the license to be an integrated Healthshield provider in Singapore. RM can definitely reap synergy between its insurance business and brick and mortar health business.

Future Growth in China

Raffles Medical has imported its reputable brand name from Singapore to China as well and has been gaining traction.

  • Currently operates various medical centres in China cities

  • Two new Raffles hospitals expected in 2 Chinese cities in late 2018 and 2019.

All in all, one can reasonably expect Raffles Medical to experience earnings growth from this year until 2020. It seems to be a decent stock to own that will provide sustainable dividends under its current management. Personally, I expect its earnings to grow 20% by 2020 and this may also mean future dividends of 2.75-3 cents per share, to be sustained perpetually until its reputation is adversely affected. Based on the above growth prospects, I expect an additional 25% growth in earnings in 2020.

  • This probably means RM is priced at 20x its future earnings growth; just about right at the current price.


It is reassuring to learn that its Executive Chairman (Dr Loo Choon Yong) who runs its business is a doctor by training. With the key management being professionals in the medical field, they are more attuned to the running of the ground. Its management has also been very conservative in building up the business.

  • RM has constantly kept its leverage ratio low, currently at 10%; and pays its dividends in a sustainable manner.

  • This makes the company a good choice as a dividend stock; even better than telecos who are highly leveraged

  • Paying a high payout ratio, beyond their free cash flow

The only thing dividend investors have to stomach is its low dividend yield and conservative management. If I may, this comes from the careful and conservative nature of doctors.


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