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Singapore Medical

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Company Profile

Lasik Club Pte Ltd was incorporated in 2005 and IPO in  2009, changing her name to Singapore Medical Group Ltd. 

Medical services that the company provides are:

  • Women's Health comprising laparoscopic, obstetrics & gynaecology and breast screening & treatment.

  • General Health comprising paediatrics, cancer, cardiac, urology, diabetes, thyroid and endocrine.

  • Diagnostics & Aesthetics comprising eye, dental imaging and aesthetics.

As of December 2020, the company has 18 clinics spread across Singapore where most of the businesses resides.

The Group addresses markets in Australia, Indonesia and Vietnam via joint ventures and associates. 

2011 - 2014

The Group discontinued Singapore Sports Medicine Centre at Novena in FY10. 

Between FY11~FY14, the Group registered operating losses due to start-up cost, wholly owned subsidiaries losses, Redeemable Convertible Preference Shares, China joint venture disposal, impairments and restructuring. 

Management was changed in Dec-2013 to strengthen organisation's leadership.

Financial  (Fiscal Year December)

Revenue peaked at $95M in FY19 with pandemic slowing her growth momentum in FY20. 1Q21 signal that revenue growth is recovering but strength of improvement is still uncertain. 

Revenue growth were driven by a combination of new business entry via acquisitions and organic business development. In FY17, the firm established a foothold in paediatrics and entered the Vietnam market.

In FY18, SMG with CHA Healthcare (Korea) collaborated to enter the Australian market. The firm also acquired an 85% stake in SW1 an aesthetic, plastic surgery & medical spa clinic. 

These activities were funded by CHA Healthcare $15M investment and $11M via rights issue.

Gross and operating margin declined from more than 60% to 44% average presently. Expense have also stabilised at 27.4%.

Diagnostic & Aesthetics margin surpassed Health in FY13 but appear to be soften since FY18. 

Risk

Balance sheet is relatively healthy with current ratio of 1.2 and Z-score of 3.4 as of FY20. However, there are $124M of goodwill in her books which could potentially weaken the balance sheet if the firm is unable to generate consistent positive cash flow. 

In FY20, a $3M impairment was made for three Paediatrics clinics acquired in 2017 due to declining earning.

Opinion

SMG NAV is $0.32 while NTA is only $0.06 due to goodwill. In FY19 and FY20, NTA appear to be gaining in value. Share price at time of writing is $0.305.

Since FY17, profit have increased from $8M to $13M in FY19 with net margin of between 12% to 15%. FY20 is coloured by the pandemic, but nevertheless chalked up a net profit of $9M or 10% margin.

While business is profitable; the present 'danger' of goodwill impairment will continue to cloud results, like in FY20.