SINGAPORE (July 26): OCBC Investment Research is keeping its “hold” recommendation on Raffles Medical with a slightly lower fair value estimate of $1.54, down from $1.57 previously.

Despite continued strong revenue growth with a 19.8% increase in 2Q revenue to $119.0 million, Raffles Medical is seeing some “near term cost pressures”, says OCBC lead analyst Jodie Foo in a Tuesday report.

Raffles Medical Group's earnings rose 4.5% to $16.7 million in the second quarter ended June 30, 2016, from $15.9 million in the previous corresponding quarter.

(See Raffles Medical’s 2Q earnings rise 4.5% to $16.7 mil on higher patient load)

“However, overall revenue growth was offset by higher costs such as staff costs due to staff recruitment for the new medical centre at Holland V,” says Foo.

Meanwhile, at Raffles Medical’s recently acquired International SOS (MC Holdings) and its subsidiaries (MCH), staff costs still accounted for 57% of its revenue, she adds.

“Nevertheless, we believe the group’s pipeline of expansion plans give strength to its long term growth story, thus longer term investors can look to accumulate below $1.45,” Foo says.

As at 11.02am, Raffles Medical is trading 1.3% lower at $1.55.