The Positives
The Negatives
Outlook
We are cautiously optimistic about FY18e. We expect its Cancer-related segment to support Group’s FY18e profitability amidst persistent headwinds – (a) sluggish birth rate; and (b) structural slowdown in medical tourism.
In addition, the Group is also introducing new income streams – (a) collaboration with SATA CommHealth (to commence in end-May 2018); and (b) tapping into an unserved niche market for HIFU (High Intensity Focused Ultrasound) treatment.
Maintained Accumulate and TP of S$0.42, based on unchanged FY18e EPS of 1.82 SCents and forward PER of 23.2x. We like the company as it has consistently gain traction in O&G market, a testament to the underlying strength of its core businesses. Meanwhile, the Group has been actively seeking new recruits of medical practitioners to expand its four growth pillars. Management targets to add 2-3 new specialists, to its O&G, Dermatology and/or Paediatrics segments, by FY18e. We are cognizant of the margin pressures arising from the latent period of the new doctors.
The Group has a clean balance sheet with zero debt and a cash position of S$19.98mn (c.11% of its market cap).
Potential re-rating catalysts
Lin Sin has been an investment analyst in Phillip Securities Research since June 2014, where she started as an economist, focusing on China and ASEAN macroeconomics. Currently, she covers primarily the Consumers and Healthcare sectors in Singapore equities market.
She graduated with a Bachelor of Science in Mathematics and Economics from NTU.