How Raffles Medical Group can beef up portfolio after two recent losses

It's not entirely bad news.

According to CIMB, the group’s re-application for a new proposed specialist centre in Orchard Road (Thong Sia Building, 30 Bideford Road) has not been successful. Also, its bid for a new Hong Kong hospital lost out to IHH Healthcare two weeks back.

However, CIMB does not read such developments as strictly bad news, unlike the market. CIMB reckons this is the time to watch how management takes stock and beefs up its existing operations, while keeping its eyes on the various greenfield projects it has in mind. 

Here's more:

Flagship hospital expansion key to growth. Within Singapore, the group does not lack real estate to house its medical operations. Yes, space has increasingly become a constraint, but existing capacity expansion in flagship Raffles Hospital should take care of near-term needs.

Besides, its proposed Orchard specialist centre was never meant to be a full-fledged hospital. The group’s existing efforts to upsize Raffles Hospital for another 100,000 sf of space should now take centrestage.

It is making progress with its team of consultants and the relevant government authorities on the extension of Raffles Hospital’s premises at North Bridge Road.

Shenzhen hospital should take shape. In terms of greenfield projects, RFMD will probably focus on its JV with China Merchant Bank to develop a Shenzhen hospital. We understand that ChinaMerchant Bank will be responsible for Chinese regulatory approvals, and the hospital should be ready in three years’ time.

To recap, RFMD signed a non-binding Letter of Intent with China Merchant Shekou Industrial Zone Co., Ltd, a wholly-owned subsidiary of China Merchant
Group, last month to collaborate on the development of an integrated international hospital with more than 200 beds in Shekou, Shenzhen, China. 

The hospital is expected to provide high-end medical services in the Pearl River Delta to foreigners and affluent local residents, subject to relevant regulatoryapprovals.

Organic growth from existing businesses. In the last one year, Raffles Health Screeners and Raffles Executive Medical Centre had been relocated to larger and dedicated premises on Level 12 of Raffles Hospital.

Its new Health Check Centre was relocated to Level 1 to cater to statutory and employment-related medical checks, freeing up space for the expansion of its General Practice and Emergency Centres.

A clinic at Raffles Place has been relocated to larger premises with the introduction of a Raffles Executive Medical Centre at Singapore Land Tower.
Similarly, centres at Tampines One and Causeway Point have been expanded to serve patients better.

Additionally, the group will continue to extend its corporate clients in the hoteling, F&B, fashion and financial & governmental sectors and continue to benefit from a government-initiated Community Health Assistance Scheme (CHAS). All its clinics are accredited to serve Singaporeans under CHAS.