$RAFFLES MEDICAL GROUP LTD(BSL.SI)$ 

Lately, I saw quite a few reports on positive catalysts for Raffles Medical Group (RMG).

Firstly, RMG is set to benefit from a rebound in medical tourism. RMG observed that visitors from regional countries (such as Indonesia, Vietnam, etc) have been flowing in since Singapore significantly eased its border restrictions. RMG foresee that the number of medical tourists will exceed the levels seen prior to the Covid pandemic. These patients from abroad have historically accounted for 25-30% of Raffles Medical hospital revenue, and it is expected that this figure could be surpassed in 2023-24. The recovery in this industry is being stimulated by the return of Indonesian patients and the growing interest of Indo-China, particularly in Vietnam where the economy is thriving due to a surge in investment from multinational corporations that are seeking to reduce their exposure to China. Medical tourists typically require more complicated medical procedures, which is a positive indication for generating higher revenue.

Investors may be concern that the increase in costs and a significant decrease in Covid patients could impact profit margins. However, one positive trend to observe is the strength of local outpatients. In the second half of 2022, outpatient revenue exceeded pre-Covid levels, and if this momentum can be sustained, it could help offset higher input costs. Another factor that could drive growth is local inpatients, which is expected to improve as Raffles Medical expands its presence with insurance companies. Additionally, Raffles Medical's collaboration with MOH allows it to take advantage of the current capacity constraints at public hospitals. For example, it has expanded its range of services from emergency aid to community care.

RMG management also reported that the sudden shift in China's zero Covid policy at the beginning of January has resulted in increased hospital admissions in the region. The majority of these patients have mild symptoms and can afford the costs of private healthcare. Currently, Greater China represents approximately 7% of RMG's total revenue. As China moves towards an endemic phase by the end of the first quarter of 2023, this could lead to a shorter period for the RMG's China operations to reach breakeven.

However, valuation has been albeit too expensive at current price of 1.44, which is around 26x PE. It is a great sector but the TAM is limited. Personally i will not invest in RMG at this price, but this is no doubt an interesting company.

@Daily_Discussion @TigerStars