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9 Key Takeaways From Raffles Medical Group’s 2018 Annual General Meeting

Raffles Medical Group Ltd (SGX: BSL) (RMG) held its 2018 Annual General Meeting on 26 April 2019. As a recap, RMG runs hospitals and healthcare services in Singapore. It also has a wide network of clinics in five countries and 13 cities and is in the process of constructing two hospitals in China, of which one is already completed.

Here are nine highlights from that AGM:

  1. Promotional activities run by Raffles Hospital Chongqing (RCQ) included the Chongqing International Marathon, which attracted 30,000 runners. RCQ provided health screening and medical services for the runners to raise awareness for the hospital.
  2. Hospital services segment saw a fall in segment profits. This was mainly due to the depreciation (expenses) for the new Raffles Hospital Specialist Centre, as well as disruptions in services due to the renovations there.
  3. For the investment properties division, occupancy rate at Raffles Hospital Specialist Centre remains low at 40% to 50% at the moment as RMG still has a couple of floors to lease out. Management is assessing the market carefully in order to find the right tenants.
  4. The total number of beds in RCQ is 700, but thus far only around 150 beds have been opened, and the rest will progressively follow. The hospital currently employs 200 staff along with 35 doctors.
  5. Projections for RCQ are for an EBITDA loss of S$8 million in the hospital’s first year (i.e. 2019), followed by an EBITDA loss of S$4 million in 2020 and EBITDA breakeven by the third year (2021).
  6. RCQ has extra space situated contiguously beside the current hospital grounds, which will act as a “space bank” for the future growth of the hospital. Dr Loo is confident of growth in the long-term and has a 7-10 year view for the eventual utilisation of this space.
  7. There is a trend of declining foreign patient numbers in 2018 for all hospitals in Singapore. Indonesian patients used to make up the bulk of the “medical tourism” trend, but due to the strong Singapore dollar and also the rising costs of medical procedures, many of these patients have begun to visit Malaysia and Thailand instead.
  8. As for future plans, RMG may decide to build a second hospital in Shanghai if the first turns out to be successful. China has many cities with large populations of over 20 million (as compared to the whole of Singapore with “only” 5.5 million people), and this opens up numerous opportunities for RMG to expand into them in the future.
  9. RMG will continue to pay dividends where it can afford to, as it has sufficient resources and internal cash flow generation to pay for the capital expenditure for new hospitals.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore recommends shares of Raffles Medical Group. Motley Fool Singapore contributor Royston Yang owns shares in Raffles Medical Group.