Credit update: Clearer path to recovery supports appeal for Thomson Medical Group’s bonds

Thomson Medical Group ("TMG") posted a solid 12% YoY rebound in revenue to SGD 394.7M, driven by stronger performance in Malaysia and the full-year contribution from Vietnam. However, higher finance costs and operating expenses resulted in a net loss of SGD 47.0M.

Despite near-term earnings pressure from operational challenges in Malaysia and the recent acquisition, we now see a clearer path to recovery, with Singapore continuing to anchor the Group’s recovery.

Cash flow from operations remains resilient, generating a free cash flow of SGD 26.1M in FY25. Decent liquidity position - cash of SGD 114.0M and credit facility of SGD 225.0M - adequately covers near-term maturities.

Debt levels have steadied, though they remain relatively high. Encouragingly, maturities are light in the near term and well spread between 2027 - 2029. We are also comfortable with TMG’s interest coverage.

While TMG’s credit profile has weakened, we expect it to stabilise going forward. We maintain our preference for the Group’s 2027, 2028, and 2029 notes.

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, recognized 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.

Mixed financial results in FY25…

As of 30 June 2025 (“FY25”), TMG reported a 12% YoY rebound in revenue to SGD 394.7M (FY24: SGD 351.2M), reversing the -1% YoY decline recorded the year prior (chart 1). Growth was fuelled by stronger performance in Malaysia’s healthcare operations—lifted by the launch of the new Oncology Centre and favourable FX exchange rate —as well as the first full-year revenue contribution from Vietnam following the acquisition of Far East Medical Vietnam Limited (“FEMVN”) in December 2023.

The Group continues to maintain a strong presence in Singapore, which remains its revenue anchor, accounting for approximately 48% of revenue. Encouragingly, Singapore’s operations have stayed resilient, even as revenue dipped slightly to SGD 190.4 million in FY25 (from SGD 200.2 million in FY24). 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 14% YoY for outpatient and 3% YoY for inpatient, providing firm support for the segment’s revenue (chart 2). Meanwhile, bed occupancy rates held steady at a decent 55%, with more than half of its operational beds being occupied by inpatients.

On the flip side, the full-year consolidation of FEMVN’s operating costs significantly increased total expenses, dragging EBITDA down by 32% YoY to SGD 75.1M (FY24: SGD 109.8M), after excluding non-recurring and non-cash items (chart 1). Modestly higher finance costs, stemming from loans taken to fund the acquisition, further weighed on earnings. As a result, the Group posted a net loss of - SGD 47.0M in FY25 (FY24: SGD 18.2M).

Chart 1: TMG posted a solid 12% YoY rebound in revenue in FY25, but higher operating expenses weighed on EBITDA

Chart 2: Singapore remains the revenue anchor, with significant total billings from both inpatient and outpatient

… but the path to earnings recovery is clearer

Despite softer earnings, all of the Group’s core operating segments—Singapore, Malaysia, and Vietnam— remain profitable. While earnings have been weighed down in recent years by operational headwinds in Malaysia and the FEMVN acquisition, we now see a clearer path to recovery, with Singapore continuing to lead the way.

In Vietnam, with the FEMVN acquisition now completed, the Group is now positioned to benefit from stronger revenue and EBITDA contributions going forward. That said, we anticipate a more modest recovery in the near term, as intensifying competition in Vietnam’s hospital and clinic landscape could temper growth momentum.

In Malaysia, we also expect earnings to rebound gradually as operations recover from the drag caused by the termination and repricing of several insurance contracts. Insurance contracts are important for patient volume as they significantly influence the accessibility, affordability, and trust in the healthcare provider. TMG is currently recalibrating its partnership model with insurers, a move that could help restore insured patient volumes over the longer term. The recent appointment of Dato’ Dr. Adzuan Abdul Rahman as Group CEO is also expected to support this strategic shift.

A key earnings catalyst lies in the Thomson Hospital Iskandariah project, which will anchor the Johor Bay mega development. Envisioned as a multi-disciplinary hospital, the facility will launch with an initial capacity of 500 beds. Construction is slated to begin in early 2026, with operations expected by 2030.

(Johor Bay is TMG’s flagship integrated development in Johor, strategically located within the Johor-Singapore Special Economic Zone. Spanning 26 acres, the project will be developed in phases and feature a mix of healthcare, luxury residential and hospitality, commercial, and lifestyle developments. It has a projected gross development value exceeding MYR 18.0B as of end-FY25)

In Singapore, we expect greater revenue stability as the segment continues its transition into a multi-disciplinary healthcare provider, broadening its services beyond maternity care to include family-focused specialties such as paediatrics, orthopaedics, and other related services. As seen in the past, we expect healthcare offerings to broaden and include more specialist services, with the introduction of more doctors/ specialists, which should help sustain ongoing earnings momentum.

Cash flow from operations remains resilient. Positive free cash flow in FY25

TMG’s underlying cash generation slightly softened but broadly remained resilient. Cash flow from operations (“CFO”) stood at SGD 60.6M at the end of FY25 (end-FY24: SGD 83.4M), comfortably exceeding capital expenditure (“CAPEX”) of SGD 22.6M - highlighting that cash from core operations is still able to fund its investments. The Group’s CAPEX has been elevated in recent years, driven by hospital expansions and integrated development projects, and is a major capital outflow. Looking ahead, CAPEX could ramp up again with the Johor Bay project on the horizon—but we believe operational cash flow may sufficiently cover it, particularly if earnings rebound.

On a positive note, free cash flow ("FCF") remained firmly positive at SGD 26.1M in FY25 (chart 3) - positive FCF highlights TMG’s ability to generate cash after covering operating expenses and CAPEX, thereby reducing the dependence on external financing like debt. Despite consistently high levels of CAPEX, TMG has delivered positive free cash flow every year over the past five years, averaging SGD 37.5M annually. While we foresee some tightening of FCF due to increasing CAPEX, the absence of dividend payouts to stockholders should provide some cushion.

Chart 3: Despite soft earnings in recent years, cash flow has remained resilient

Sufficient liquidity and funding headroom for upcoming maturities

As of end-FY25, TMG held SGD 114.0M in cash and short-term deposits (excluding SGD 10.2M in pledged deposits). TMG has also secured an SGD 225.0M Islamic revolving credit facility in August 2025, further expanding its total available liquidity. With the Group’s liquidity and ability to sustain positive free cash flow, we expect little issue servicing short-term debt obligations, including SGD 163.9M of maturities over the next year.

Looking further ahead, the next large maturity is its SGD 175.0M bonds due in May 2027 (comprising SGD 155M and SGD 20M 5.25% 3-year notes). We see little financing risk given TMG’s current cash flow generation and liquidity position. Should market conditions improve, particularly if interest rates ease, TMG has ample headroom under its medium-term notes (“MTN”) programme to tap the bond market and secure more favourable funding.

Debt levels have stabilised but remain elevated

TMG’s gross debt inched up by SGD 6.5M to SGD 1,105.9M as of end-FY25 (end-FY24: SGD 1,099.4M), mainly due to the issuance of SGD 25.0M 4.65% notes maturing in October 2029 (re-tap). While the Group remains highly leveraged, gross debt has largely stabilised over the past two years, consistently hovering just above the SGD 1.0B mark.

Looking ahead, we see scope for TMG to take on additional debt to partly finance its Johor Bay mega development, which could keep leverage elevated in the coming years. With SGD 535.0M in outstanding notes, the Group still has headroom under its SGD 1.0 billion MTN programme for further issuances. According to management, other modes of financing include profit recycling from Phase 1 of Johor Bay to fund subsequent phases, as well as forming partnerships or joint ventures for non-core real estate components. This diversified funding approach should help reduce reliance on borrowings and keep leverage manageable.

TMG’s net debt to EBITDA ratio rose sharply to 18.2x as of end-FY25 (end-FY24: 9.4x), driven by a decline in EBITDA and a modest rise in net debt to SGD 991.9M (end-FY24: SGD 956.0M). Other leverage metrics saw smaller change — total debt-to-asset was estimated to be 62% (FY24: 61%), while total debt-to-equity ticked up slightly to 202% (FY24: 191%), reflecting a 5% year-over-year decline in equity. Despite only marginal changes in these ratios, they continue to underscore a leveraged capital structure. Overall, TMG’s debt ratios are higher than industry peers and reflect management’s willingness to stretch the balance sheet in pursuit of regional expansion and large-scale development projects.

Chart 4: Gross debt remains high but has stabilised

Table 1: Debt metrics have weakened in FY25, largely due to softer EBITDA and modestly higher debt

Credit metrics	End-June ‘21	End-June ‘22	End-June ‘23	End-June ‘24	End-June ‘25
Credit metrics	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025
Net debt to EBITDA (x)	7.6	4.4	4.6	9.4	18.2
Total debt to equity (%)	109%	103%	130%	191%	202%
Total debt to asset (%)	48%	46%	52%	61%	62%
EBITDA to finance costs (x)	2.8	4.7	3.4	2.0	0.9
Adj. EBITDA to finance costs (x)	2.8	4.7	3.5	2.1	1.3
CFO to finance costs (x)	2.6	3.9	2.9	1.6	1.0
Source: Bloomberg, iFAST estimates, iFAST compilations. Data as of 30 June 2025 CFO denotes cash flow from operations. * Ratios are calculated on a last twelve months basis.

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 85% of the Group’s gross debt is due only in the longer term as of end-FY25, leaving near-term financing needs relatively light. This further reinforces our view that near-term financing risk remains low, especially given the Group’s resilient operating cash flow (as outlined above).

TMG’s interest coverage also remains within our comfort zone. The Group’s EBITDA-to-interest ratio declined to 0.9x as of end-FY25 (end-FY24: 2.0x), primarily reflecting softer EBITDA rather than a significant rise in finance costs. On an adjusted basis—excluding one-off and non-recurring items—EBITDA coverage stood at a healthier 1.3x (FY24: 2.1x). After the FEMVN acquisition, and as benchmark rates decline, we do not expect finance costs to rise significantly, barring a sharp take up in debt.

Looking ahead, the Group’s outstanding notes are expected to incur annual interest costs of SGD 9M to 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, with a CFO-to-interest coverage ratio of around 1.0x (end-FY24: 1.6x).

Recommendations

Table 2: Thomson Medical issuances

Issuances	Ask Price	Yield to Maturity	Years to Maturity
TMGSP 5.250% 13May2027 Corp (SGD)	103.0	3.25%	1.56
TMGSP 5.500% 31May2028 Corp (SGD)	105.1	3.43%	2.61
TMGSP 4.650% 29Oct2029 Corp (SGD)	104.2	3.52%	4.02
Sources: Bloomberg Finance L.P., Bondsupermart, iFAST Compilations. Data as of 24 October 2025.

TMG’s credit profile has weakened due to softer earnings and a moderation across most credit metrics. However, we remain comfortable with the issuer despite higher leverage levels. We expect the credit profile to stabilise gradually going forward, supported by 1) a clearer trajectory toward earnings recovery, 2) resilient 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—particularly against a falling yield backdrop. 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 3.3% with a short tenor of under 1.6 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.

Select Country/Region

Credit update: Clearer path to recovery supports appeal for Thomson Medical Group’s bonds

Mixed financial results in FY25…

Chart 1: TMG posted a solid 12% YoY rebound in revenue in FY25, but higher operating expenses weighed on EBITDA

Chart 2: Singapore remains the revenue anchor, with significant total billings from both inpatient and outpatient

… but the path to earnings recovery is clearer

Cash flow from operations remains resilient. Positive free cash flow in FY25

Chart 3: Despite soft earnings in recent years, cash flow has remained resilient

Sufficient liquidity and funding headroom for upcoming maturities

Debt levels have stabilised but remain elevated

Chart 4: Gross debt remains high but has stabilised

Table 1: Debt metrics have weakened in FY25, largely due to softer EBITDA and modestly higher debt

Maturity profile for notes and interest coverage remains within our comfort zone

Recommendations

Table 2: Thomson Medical issuances

Bond Update: KWG’s Offshore Debt Restructuring Plan

Credit Update: Heeton Holdings Limited announces exchange offer for its 2026 SGD notes.

Idea of the Week: Deere bonds – farming the satellite economy via SpaceX connectivity

China tightens cross-border investing: Equity noise but limited credit impact

Home

About Us

legal

Useful Links

Select Country/Region

FSM Mobile Apps

Follow Us