Metro Holdings Limited will invest S$6mn through new preference shares for a 10% stake in Hyphens wholly owned subsidiary DocMed Technology (DocMed). DocMed owns Hyphens medical B2B hypermart (POM Medical Hypermart) and a licensed e-pharmacy (WellAway).
With the proceeds, DocMed will build up its manpower (technology, operations, marketing) and enhance its B2B platform to serve doctors. The platform can be enhanced with more pharmaceutical offerings, mobile features and a regional footprint across ASEAN. The expected timeline to enhance and expand the B2B platform is two years.
Key operational milestones of the platform will include a larger number of doctors joining and purchasing through the platform. Pharmaceutical companies are constantly looking to reach out and engage doctors. DocMed platforms will be an important platform to showcase their drugs to doctors. In turn, DocMed can generate new sources of revenue such as advertising and promotion from pharmaceutical companies.
We upgrade our recommendation to BUY with a higher TP of S$0.43 (prev. S$0.345)
Hyphen’s multiple-year growth strategy is to expand its proprietary brands of skincare products (e.g. Ceradan and tDf) across the region. The creation and development of the digital healthcare platform DocMed is an additional growth and share price catalyst. Near-term earnings drivers are the acquisition of Novem and growth in specialty pharma sales due to the return of elective surgeries after the pandemic.