Looks Good

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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.

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

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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.

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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. 

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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.

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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. 

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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.

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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.

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