Broker's take: Nomura wary of higher costs at Raffles Medical in Q2 results

NOMURA warned on Tuesday of rising operational costs at Raffles Medical Group (RMG), after the group reported a 4.5 per cent increase in quarterly net profit to S$16.67 million.

"Revenues grow strongly, but so do costs," said the brokerage which had a "buy" rating on the stock. Its target price stood at S$1.77.

RMG's revenue grew 19.8 per cent to S$118.95 million for the second quarter, lifted by all divisions' performance.

But costs grew faster than revenues due to the opening of the new medical centre at Holland Village, with staff costs rising to 50.4 per cent in the second quarter as the company hired doctors and other healthcare staff in line with its expansion plans, the report said.

Shares of RMG fell 1.5 Singapore cents to S$1.55 as at 10.19am.