How Profitable Are Raffles Medical Group Ltd’s Different Businesses?

Raffles Medical Group Ltd (SGX: BSL) runs a hospital in Singapore (Raffles Hospital) and also provides healthcare services here through a wide network of medical centres and clinics. It has a network of medical centres and clinics in a number of other Asian countries too and has a hospital under development in China which is projected to be completed by 2018.

In a previous article, I shared that Raffles Medical has three different revenue-generating business segments. A quick recap is that the Hospital Services segment accounted for 61% of the company’s total revenue in 2015, followed by Healthcare Services at 36% and Investment at just 3%.

I thought it could be interesting to follow up with a look at the profitability of each segment.

More specifically, I want to understand how well each segment is doing when it comes to making a profit on each dollar of Raffles Medical’s equity that they employ. In other words, I want to calculate the return on equity for each segment. (The return on equity is found by dividing each segment’s profit with its net assets, or equity.)

Source: Raffles Medical 2015 annual report.

The winner is clearly Hospital Services – it has a 78% pre-tax return on equity.

By analysing the profitability of the company’s different segments separately, we can see that the Hospital Services segment is a very important business for Raffles Medical.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Raffles Medical Group. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.