Raffles Medical Group

[money]

The expansion into china didnt work out as expected. Turns out that it is not like if you are successful in singapore, you can easily replicate the success in china. Tough business environment

[dreamybear]

Sakura Research has published several articles on RMG (2 examples below), including calls for strategic review.
https://sakuraresearch.com/

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Raffles Medical Group: Letter to SGX, SIAS, and The Auditor, KPMG LLP (SGX:BSL)
https://sakuraresearch.com/?p=312

Raffles Medical Group: Letter to the Board (SGX:BSL)
https://sakuraresearch.com/?p=258

[Shiyi]

Sakura Research has published several articles on RMG (2 examples below), including calls for strategic review.
https://sakuraresearch.com/

-----------------------

Raffles Medical Group: Letter to SGX, SIAS, and The Auditor, KPMG LLP (SGX:BSL)
https://sakuraresearch.com/?p=312

Raffles Medical Group: Letter to the Board (SGX:BSL)
https://sakuraresearch.com/?p=258

Anybody knows the background of Sakura Research? Search the website and find no info about it. Interviewed by Business Times, the "spokesman" prefers to be anonymous. Why so secretive?

For the sake of credibility, it's important for small investors to know the background of those who come out with research reports, as well as their agenda.

[weijian]

Anybody knows the background of Sakura Research? Search the website and find no info about it. Interviewed by Business Times, the "spokesman" prefers to be anonymous. Why so secretive?

For the sake of credibility, it's important for small investors to know the background of those who come out with research reports, as well as their agenda.

hi Shiyi,

While it is useful to know the background, but I would also argue that "knowing the background" makes us fall more easily into the halo effect bias.

There has been countless posts on VB.com over the years. Of the many that I took counsel of (and then benefitted from), almost all of them were from VBs whom are considered anonymous behind an online persona. End of the day, what really matters is the strength/basis of the analysis, not the reputation of the analyst.

[weijian]

After the temporary boost from operating vaccination centers + pent-up demand upon borders re-opening in April2022, RMG has seen its financials deteriorate in the last 2 years from headwinds like regional competition for medical tourists and rising costs (wage inflation). Its China "luxury" hospitals are probably also taking longer than expected to make a profit (on aggregate) due to the macro situation in China. And that is the "business" part.

Now to the "structure portion" is where it is interesting. It seems like Dr Loo has got bitten by the "value creation and capital efficiency" bug too. That's something to be celebrated as more companies start to behave like this and Mr Market carries out the necessary discipline to reward it accordingly. And slowly but surely companies which don't, will be left in isolation.

Condensed Financial Statements For the six months and full year ended 31 December 2024

In view of its strong positive operating cash flow, the Group has revised its dividend policy to pay out at least 50% of its sustainable earnings annually. Where the Group has more than sufficient financial capacity to fund operational and capital expenditures as well as investments, the Group shall return excess capital to shareholders through:
(a) Special dividends; and/or
(b) Share buy-backs.

In addition to the above dividend, the Group intends to buy back up to 100 million ordinary shares (approximately 5.3% of total issued ordinary shares) over the next two years. These re-purchased shares will be kept as treasury shares in the first instance adding to the existing 26.4 million shares held. A portion of these Treasury shares will be used to fulfill issuances under the Raffles Medical Group Employee Incentive Schemes. Excess Treasury shares may be cancelled in the future. The intention of these capital management initiatives is to optimise our capital structure, return excess cash, improve return of equity (ROE), and achieve earnings per share accretion.

RMG FY24 results: https://links.sgx.com/FileOpen/RafflesMe...eID=833941

[weijian]

Generous sharing from Dr Loo on the state of affairs of the medical scene in Spore/Msia/China. As for opening in Johor-Spore SEZ, I would argue that the targeted clientele would be middle class Malaysians (whom are underserved by the public health sector) or well-to-do Indonesians (that are priced out of Spore). But of course, there are probably many factors as well which he may not have mentioned. For one, I would think that due to the chronically underfunded public healthcare situation in Msia, tons of competitors have already appeared for some time with covid-19 accelerating capacity via new hospitals and expanded capacity.

As for the Vietnam acquisition, RMG signed a mgt contract to manage an expat hospital in Vietnam. Therefore, I suppose that is the natural fit?

As Raffles Medical celebrates its golden jubilee, the doctor calls for more patience

Dr Loo admitted that the regional middle class – the former lifeblood of Singapore’s medical tourism – is increasingly bypassing the city-state for destinations such as Kuala Lumpur and Bangkok. In a sense, Singapore has become an “ICU for the ultra-rich”, catering to those who prioritise safety over cost.  “The very rich from the region will still come,” Dr Loo said at RMG’s results briefing earlier this week. “The top businessmen, the top generals or the top politicians – they will all come to Singapore because they feel safer.” But banking on the elite is a niche strategy, not a volume one.

But for RMG’s hospitals in China, the reality is a waiting game. The group is seeing some success, with Chinese patients – instead of expats – now making up the biggest share of its customers there. These are mostly “hai gui” – a Chinese term for returnees who have studied or worked overseas, Dr Loo said. “They don’t want to go to the state hospital because the waiting time is very long and the service is not very personal,” he added.

The group is currently deep in due diligence – which it expects to come to a conclusion by H1 2026 – for a hospital acquisition in Vietnam. While it is a necessary hedge against Singapore’s maturing market, Dr Loo described it as a “medium to long-term play”. After all, you don’t just buy a hospital and see earnings pop; you buy, you improve, and you wait years for the reputation to bake in.

While rival Thomson Medical is busy sketching out 500-bed mega-hospitals in Johor, Dr Loo remains notably unenthused. He questions the logic of a hospital that would struggle to compete with Singapore’s own heavily subsidised public healthcare system just across the Causeway. “We have not made up our minds. We are studying, but initially it does not appear to make a lot of sense to us,” he said. Indeed, why fight for a patient who is already getting 80 per cent off at a Singapore government hospital?

https://www.businesstimes.com.sg/opinion...e-patience