OVERVIEW:
The company provides tertiary healthcare services in the fields of medical oncology and palliative care to oncology patients under the Parkway Cancer Centre (PCC) brand name. Its clinical functions include attending to patients, examination and administering medical treatment to patients, prescribing medicines and investigations such as laboratory tests. The medical oncology practice has an established track record of more than 15 years. Currently, there are 7 clinics in Singapore.
HIGHLIGHTS:
[1] 3Q2015 saw its revenue up 4% year on year. Due to higher employee benefit and operating expenses, net profit drop 2% year on year.
[2] In June 2015, it acquired 30% in Hong Kong Integrated Oncology Centre Holdings Limited which is also its first overseas venture. CIMB analyst projected $1m of share of loss will be incurred annually before breaking even in 2017.
INVESTMENT THEMES:
[1] According to the National Registry of Diseases Office in Singapore, 13,416 people were diagnosed with cancer in 2014, vs 12651 in 2013. The company is positioning in an environment where the incidence of cancer is on any upward trend.
[2] It is in net cash position (0 gearing ratio) with insignificant short term liability. Cash and cash equivalent stood at $39.5m. Current trading price represents ~4.7% of dividend yield. PE ~17 which is pretty attractive among its peers.
[3] Based on discount cash flow model (DCF), CIMB derived $1.27 as target price for the counter.
[4] While market is facing headwind over weakening regional economic, healthcare and medical sector could be one defensive counter in one's portfolio.
PRICE TREND:
The counter usually trades in insignificant volume so price could fluctuate in wide range. It would be a boring counter for traders. Long term investor could take dividend yield as a gauge for entry.
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