Raffles Medical Group earnings per share estimate cut by 8-12% for FY22/24

Maybank Securities Research cited two reasons for its lower estimate.

Raffles Medical Group (RFMD) might see lower earnings per share (EPS) from the financial year 2022 to 2024, based on a forecast from Maybank Securities Research.

In a report, the firm said they cut their FY22-24 EPS estimate by 8% to 12% as they expect lower contributions from the private medical provider’s COVID-19 related services and China hospitals.

“We forecast COVID-19 support activities to taper off sequentially, especially its PCR test revenues as Singapore relaxes testing protocols for VTL travellers,” the analyst said.

On the group’s China hospitals, Maybank said: “China is experiencing sporadic COVID-19 clusters that may impact some of RFMD’s operations there.”

“Management has guided that break-even for its Chongqing hospital is likely to be delayed by a year to 2022, and Shanghai operations could incur EBITDA loss of $10m this year,” the analyst added.

The estimated core EPS for FY22, FY23, and FY24 was $0.041, $0.043, and $0.046, respectively.

Meanwhile, Maybank said RFMD would benefit from the government’s restructuring of the local healthcare system under its proposed 2022 budget, “allowing GPs to play a greater role given the fast-ageing population.”

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