OVERVIEW:
Incorporated on 2011, the counter is in business of providing healthcare services to women, with a focus on the female reproductive system, pregnancy care and delivery, and gynaecological and breast cancer. There are totally 7 physicians. Most of the them have a track record of more than 10 years, which two founders hold more than 20 years of experience each. The clinics located in medical centers such as Gleneagles, Mount Elizabeth, Thomson, etc.
HIGHLIGHTS:
(1) The counter has been debt free over past 2 years. Operating cash flow grew from $2.1mil in 2012 to $4.9m in 2014. Earning per share surged 30% on FY2014.
(2) Private sector generally makes up ~60% of live births in Singapore. The counter's market share has been increasing from 4.3% in FY2012 to 5.6% in FT2014.
(3) The management targets a 90% payout ratio for dividend, which is expected to be 3~4% based on current trading price.
(4) The counter listed on SGX on early June 2015. With ~$9.2m of net proceeds, the management is planning to expand into infertility and in vitro fertilization, and paediatrics. Long term plan involves expanding into childcare services as well as buying more clinics in the region (such as Myanmar, Malaysia, PRC)
INVESTMENT THEMES:
(1) Compared with public sector, private obstetrics and gynecology clinics offer a wider range of services, greater flexibility and could potential house more experienced specialist medical practitioners. Hence the demand for private healthcare remains strong. Besides, there is about 400,000 foreigners travel to Singapore for medical treatment annually. Investor could take this as one defensive counters in portfolio.
(2) The counter is in cash rich position, thus less susceptible to the upcoming trend of rate hike. Potential expansion plan could also raise return to investor in mid to long term.
(3) UOB rated the counter at $0.87 based on PEG ratio in the medical industry.
ENTRY PRICE:
From the chart, the counter is edging towards support ~ 0.655. Considering the huge buying volume on June, suggestion is to accumulate near to 0.655.
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