• Thomson Medical Group ("TMG") posted a decent +7% YoY increase in revenue to S$213.1 million, driven by stronger performance in Singapore, Malaysia and Vietnam. However, higher finance costs and operating expenses resulted in a net loss of S$9.1 million, a slight improvement compared to 1HFY25: - S$12.6 million.
• Singapore continues to anchor the group’s earnings, while the operational turnaround in Malaysia more than offset the group’s softer Vietnam performance (challenged by currency headwinds and competition), leading to earnings improving compared to 1HFY25.
• Cash flow from operations remains resilient, generating a free cash flow of S$26.5 million in 1HFY26. While the cash on hand of S$95.2 million does not adequately cover the upcoming S$175 million maturity of 2027 bonds, the group’s credit profile is bolstered by its S$276 million land bank in Johor and its substantial S$465 million headroom under its debt issuance programme.
• Debt levels have steadied, though they remain relatively high. Encouragingly, maturities are light in the near term and well spread between 2027 and 2029. We are also comfortable with TMG’s interest coverage.
• TMG’s credit profile has improved, owing to an operational turnaround in Malaysia, with Singapore providing stability. We maintain our preference for the Group’s 2027, 2028, and 2029 notes.
We first covered the Thomson Medical issues and provided an update on the group following the release of its FY25 results. The group recently released its 1HFY26 results, and in this article, we provide our updated view of the group’s credit profile.
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Thomson Medical Group Limited ("TMG") is a healthcare services provider with operations across Singapore, Malaysia (via TMC Life Sciences Berhad), and Vietnam. These three countries also represent the Group's key reporting segments.
In Singapore, TMG operates under the Thomson brand of healthcare services, recognised as one of the largest private providers for women’s and children’s healthcare. In Malaysia, it operates the Thomson Hospital Kota Damansara through its majority-owned (~70%) subsidiary TMC Life Sciences. It also owns Thomson Hospital Iskandariah, which is currently in the planning stage. In Vietnam, TMG operates FV Hospital, a multi-disciplinary tertiary hospital acquired in December 2023.
Softer but still resilient financial results in 1HFY26
Singapore remains the group's main revenue contributor, accounting for 49% of revenue in 1HFY26. Encouragingly, Singapore’s operations have stayed resilient, even as revenue dipped slightly to S$190.4 million in 1HFY26 (from S$200.2 million in 1HFY25). Although both outpatient and inpatient volumes declined year-on-year, this was offset by an increase in average bill sizes across the board, driving total billing growth (number of patients x average bill size). Total billings rose by 4.0% YoY for outpatient and 9.6% YoY for inpatient, providing firm support for the segment’s revenue (see chart 2 below). Meanwhile, bed occupancy rates held steady at a decent 50%. Looking forward, we expect Singapore to remain the bedrock of the group’s financials.
On the cost front, increased total expenses caused EBITDA to remain flat at S$38.9 million (1HFY25: S$39.1 million), after excluding non-recurring and non-cash items (chart 1). While net finance costs moderated 16.1% YoY to -S$24.2 million, due to proactive debt repayment, this item still pressured earnings. As a result, the Group posted a smaller net loss of – S$9.1 million in 1HFY26 (1HFY25: -S$12.6 million). Moving forward, we expect TMG to continue maintaining its EBITDA while waiting for its Johor hospital to come online (more on that later).
Chart 1: TMG posted a decent +7% YoY rise in revenue in 1HFY26, but higher operating expenses weighed on EBITDA
Chart 2: Singapore remains the revenue anchor, with strong improvement from Malaysia
TMG is making strides in the recovery of its earnings
• In Vietnam, TMG saw revenue (-1.1% YoY) and EBITDA (-22.3% YoY) decline for this region due to a competitive local landscape and currency headwinds. That said, we expect a modest recovery for Vietnam due to three factors: 1) higher patient volumes noted by management, 2) the employment of advanced technology like the Da Vinci Xi Robotic System, which could drive operational synergies, and 3) the onboarding of state health insurance for all medical examination and treatment services offered by the hospital (including outpatient, inpatient, and emergency care). We believe these three factors could lead to an improvement in revenue and EBITDA for Vietnam moving forward.
• For Malaysia, we are heartened to see strong improvements in YoY revenue (+29.2% YoY) and EBITDA (+73.4% YoY) growth as the drag caused by the termination and repricing of several insurance contracts fades due to the successful recalibration of its partnership models. Additionally, the successful launch of the new Thomson Oncocare centre (a cancer treatment centre) contributed to a 57% increase in outpatient bill sizes.
• The RM$18.0 billion Johor Bay mega-development remains the group’s most significant long-term earnings catalyst. Strategically located within the Johor-Singapore Special Economic Zone, management has affirmed the project’s timeline to be on schedule with the launch of the 500-bed Thomson Hospital Iskandariah in December 2026. This integrated development, including a 47-storey ultra-luxury residential tower, is projected to have a gross development value of RMS$3.1 billion and could provide a major uplift in earnings for the group over the longer term which should support coverage for its 2028-2029 bond issues.
• Singapore continues to remain the group’s bedrock for revenue and earnings. The deliberate shift toward complex specialities like orthopaedics and spinal surgery is helping to support pricing power, seen in the average inpatient bill surging 22.6% YoY. This increases the resiliency of the region’s revenue and earnings base.
Cash flow from operations remains resilient. Positive free cash flow was higher in 1HFY26 due to lower capex
A key pillar of this disciplined spending is the group’s “asset-light” approach to the Johor Bay project. By bringing on joint venture partners for non-healthcare components and utilising “profit recycling” from luxury residence sales to fund the hospital’s completion, TMG is pursuing growth without overstretching its balance sheet. We view this shift toward capital preservation as a significant credit positive.
The benefits of this moderation are already evident. Free cash flow ("FCF") surged 38.0% YoY to S$26.5 million in 1HFY26 (1HFY25: S$19.2 million). If capex remains at these normalised levels, we see clear scope for TMG to meaningfully improve its FCF profile, especially once the Johor hospital comes online. The combination of lower capex spend and increased cash flow contribution should provide the one-two punch combo that lifts TMG’s resilient cash flows (see chart 3 below) meaningfully higher. Ultimately, higher FCF generation bolsters TMG’s debt servicing capacity and provides a stronger buffer for its upcoming debt maturities.
Chart 3: Resilient cash flow over the past 5 years
Sufficient liquidity and funding headroom for upcoming maturities
Looking further ahead, the next large maturity is its S$175 million bonds due in May 2027. While current cash reserves do not fully cover this maturity, TMG has a proven track record of managing its capital structure by refinancing existing debt through new bond issuances. We note that the group currently has S$465.6 million in available debt headroom under its S$1.0 billion MTN programme, providing ample headway to roll over upcoming maturities.
Hence, we see little risk in TMG being unable to meet its debt and interest obligations.
Debt levels have stabilised but remain elevated
TMG’s net debt to TTM EBITDA ratio rose sharply to 18.2x as of 31 December 2025 (31 December 2024: 9.4x), driven by a decline in EBITDA recorded during 2H25 (ending 30 June 2025), and a modest rise in net debt to S$987.0M (31 December 2024: S$960.0 million). Other leverage metrics saw smaller changes — net debt/equity ticked up slightly to 170% (1HFY25: 160%). We stress that TMG still has a highly leveraged structure, and hence the safety margin for the 2027-2029 bonds relies heavily on the group’s continued ability to produce resilient cash flows and its ability to refinance its existing debt through new bond issuances.
Overall, TMG’s debt ratios are higher than those of its industry peers. However, given management’s new focus on maintaining balance sheet stability, alongside the upcoming uplift in earnings and cash flows from the Johor hospital, we remain comfortable with the group’s credit profile and do not expect any material worsening.
Chart 4: Gross debt remains high but has stabilised
Table 1: Debt metrics have weakened in 1HFY26, largely due to softer EBITDA and modestly higher debt
|
Credit metrics |
End-June’23 |
End-June’24 |
End-June’25 |
End-December'24 |
End-December’25 |
|
FY 2023 |
FY 2024 |
FY 2025 |
1HFY2025 |
1HFY2026 |
|
|
Net debt / Adjusted EBITDA (x) |
4.3x |
11.2x |
13.1x |
9.3x |
13.2x |
|
Net debt/equity (%) |
80% |
160% |
180% |
160% |
170% |
|
TTM Adjusted EBITDA to finance costs (x) |
3.5x |
2.1x |
1.3x |
1.6x |
1.4x |
Maturity profile for notes and interest coverage remains within our comfort zone
Despite a leveraged capital structure, we find comfort in TMG’s debt profile, with maturities well spread between 2027 and 2029 (SGD 175.0M bonds due in May 2027, SGD 175.0M bonds due in May 2028, SGD 185.0M bonds due in Oct 2029). Notably, around 97.5% of the Group’s gross debt is due from May 2027 onwards, as of 1HFY26, leaving near-term financing needs relatively light. This further reinforces our view that near-term financing risk remains low, especially given the Group’s improving operating cash flow (as discussed above).
TMG’s interest coverage also remains within our comfort zone. The Group’s trailing adjusted EBITDA-to-interest ratio moderated to 1.4x as of the end of 1HFY26 (FY25: 1.3x), primarily reflecting softer EBITDA recorded for the second half of 2025, rather than a significant rise in finance costs. With the earnings improvement seen and as benchmark rates decline, we do not expect finance costs to rise significantly, barring a sharp take-up in debt. In our view, given that the heavy capex phase is over for the group, it is unlikely that the group will significantly increase its debt uptake.
Looking ahead, the Group’s outstanding notes are expected to incur annual interest costs of 28M through to end-2029, with the higher end of that range occurring in the first two years. This should remain manageable if TMG maintains a decent cash flow from operations (“CFO”), which has averaged a solid SGD 77M annually over the past five years. The Group’s CFO comfortably covered interest costs over the last 12 months.
We also expect a meaningful moderation in finance costs as the 2027 bonds approach their refinancing window. Currently, these bonds carry a 5.25% coupon, yet they are trading at yields closer to 3.2-4.0% today. If TMG successfully refinances these bonds at current market levels, the interest savings would provide an immediate uplift to the group’s bottom line and further strengthen its interest coverage ratios.
Recommendations
Table 2: Thomson Medical issuances
|
Issue |
Ask Price |
Yield to Maturity |
Years to Maturity |
|
102.07 |
3.44% |
1.18 |
|
|
103.80 |
3.70% |
2.23 |
|
|
101.75 |
4.13% |
3.64 |
|
|
Sources: Bondsupermart, iFAST Compilations. Data as of 09 March 2026. |
|||
TMG’s credit profile has improved due to stronger earnings contribution from its Malaysia operations and the stabilisation of the Singapore operations, with a moderation across most credit metrics. We remain comfortable with the issuer despite high leverage levels. We expect the credit profile to stabilise gradually going forward, supported by 1) a clearer trajectory toward earnings improvement, 2) improving operating cash flow, and 3) limited near-term refinancing risk, underpinned by a well-distributed debt maturity profile.
At yields in the low to mid-3% range, we continue to find TMG’s 2027, 2028, and 2029 notes attractive. We see value across these notes as yields continue to trade wide within the SGD corporate bond space, in an environment of easing interest rates. TMG’s notes are some of the highest-yielding options in their respective tenors and offer a meaningful pickup relative to other unrated SGD bonds of similar maturity. While the higher yields reflect TMG’s leverage levels and broader credit profile, we remain comfortable with the issuer.
We continue to favour TMGSP 5.250% 13May2027 Corp (SGD), which offers an attractive yield of around 3.4% with a short tenor of under 1.18 years. The shorter maturity reduces exposure to financing risk, particularly given TMG’s light near-term debt obligations. We also find TMGSP 5.500% 31May2028 Corp (SGD) and TMGSP 4.650% 29Oct2029 Corp (SGD) attractive, though sizes for these notes appear limited at present due to the ongoing hunt for yields. While the longer maturities carry relatively higher financing risk, we think TMG can adequately service both interest and principal payments—barring any significant increase in debt levels.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in TMGSP 5.500% 31May2028 Corp (SGD), TMGSP 4.650% 29Oct2029 Corp (SGD), and the analyst who produced this report holds a NIL position in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.
