Raffles Medical Group revenue growth weakest in four years

2 main reasons blamed for slowdown.

"On the surface, 3Q13 topline growth of 8% yoy was worryingly weakest since 3Q09, in the depths of the financial crisis," said Maybank Kim Eng, noting that both the hospital services and healthcare segments were lacklustre.

The research firm attributed the weakness to two main reasons. First, there were a higher than normal number of specialists on leave/ attending conferences during the quarter, which Maybank expects to self-correct in 4Q.

Second, the long-term government prison contract has ended. If included, Maybank said the group revenue would have been up a respectable 12% yoy.

Still, despite the relatively soft quarter, Maybank expects improvements next quarter as the company revs up its overseas expansion.

Maybank expects the company to have sufficient cash flow to fund its overseas projects.

"Management expects the proceeds from the sale of Thong Sia Building (est SGD120m) to boost its current net cash position of SGD142m. Together with healthy cash flows, we estimate the company will have no problem funding the two China projects and Raffles Hospital expansion which is still expected to
start within the next two months," said Maybank.