China – Chongqing and Shanghai hospitals
Management maintained EBITDA loss guidance for both hospitals of S$8-10mn in the first year and S$4-5mn in the second year before breaking even in the third year of operation.
RafflesHospital Chongqing has been open since January 2019. It is a 700-bed hospital located in the New North District of the Liangjiang New Area.
RafflesHospital Shanghai is expected to open in 4Q19. It will be a 400-bed tertiary hospital located between Shanghai Pudong International Airport and Shanghai Hongqiao International Airport in the heart of Pudong New Bund, a free trade zone.
Maintain Neutral with an unchanged TP of S$1.09
The demand for international standard healthcare by the Chinese middle class will bring Raffles Medical into a new and exciting phase of growth. The track record, reputation and preparation by the company makes this a compelling opportunity.
Potential re-rating catalysts: (i) Stronger demand from the MOH partnership; (ii) Better than expected performance in China hospitals; (iii) higher investment-holding revenue growth with the remaining 80% of vacant spaces leased out.