+ Revenue growth driven by medical clinics and test kit. 1H20 revenue was supported by the acquisition of Dental Focus Group’s nine dental clinics in Singapore and distribution of Biolidics COVID-19 Antibody Test Kits. It was not disclosed the sales contribution from sales kit. However, we expect it to be significant because Biolidics sold S$6.3mn Antibody Test Kits in 1H20.
+ Operating cash-flow turnaround. In 1H20, operating cash-flow generated was S$4.5mn, a major turnaround from the negative S$3.6mn a year ago. In addition to the increased profitability, working capital improved due to lower receivables from the public sector for the Indonesian operations.
+ Positive operating leverage. Despite revenue tripling in 1H20, employee expenses only increased by 14% YoY. Distribution of the test kits tapped on the existing marketing team or network. The acquisition of dental clinics only incorporated nurses and back-end staff.
– Pandemic disrupted 1H20. Several businesses were hit by the pandemic. IGM Labs operates 15 clinical laboratories in Indonesia, it faced weaker traffic as the patient admission in hospitals declined due to movement restrictions. Revenue in Singapore from dental and aesthetics was similarly weak due to lower patient load following the lockdown.
We expect all divisions to experience stronger performance in 2H20.
Maintain BUY with a target price of S$0.26. CBH continues to expand and leverage its network of medical centres throughout ASEAN. The stronger operating cash-flow and balance sheet will allow CBH to – (i) further grow via acquisition; (ii) expand their Indonesian operations faster where the capital expenditure and working capital requirements are much higher.
Overview of operations:
Medical clinics/ centres
Phillip Securities Research has received monetary compensation for the production of the report from the entity mentioned in the report. The report was previously under the ‘SGX StockFacts Research Programme’ (administered by SGX).