DBS Group Research, in an unrated report, calls Thomson Medical Group A50 3.51% a " diamond in the rough" with a strong portfolio of healthcare assets in Singapore and Malaysia, and with potential for further growth across the region with its recent acquisition of a hospital in Vietnam.

 

&ldquo Thomson Medical Group has a strong reputation as one of the largest private providers of healthcare services for women and children in Singapore,&rdquo write analysts Rachel Tan and Amanda Tan in their Dec 15 note.

 

&ldquo TMG&rsquo s niche focus on O& G places it in a prime position to grow its presence in the in vitro fertilisation (IVF) market across APAC. Aside from O& G, TMG aspires to expand its medical speciality and progressively flourish into a reputable full healthcare service provider,&rdquo they add.

The company now runs the Thomson Medical Centre and 37 clinics and centres in Singapore.

 

The analysts are optimistic that the recent acquisition of FV Hospital in Vietnam for $517.1 million will help drive geographic diversification and spur growth, given how healthcare expenditure per capita in Vietnam has grown at a CAGR of 9.2% between 2017 and 2022, a faster clip versus rest of the region.

 

&ldquo We understand the group remains on the lookout for further M& A opportunities in countries such as Thailand, Indonesia, and Cambodia, to expand its pan-Asian footprint, but also seeks to de-risk via partnerships,&rdquo the analysts write.

 

They project the company to report revenue and EBITDA growth at CAGRs of 12% and 11% between 2024-2026, driven by organic and inorganic factors.

 

FV alone, which adds 230 beds to the total of 757 beds, is seen to grow Thomson Medical&rsquo s top line and EBITDA by 26% and 19% in FY2025. 

 

&ldquo Planned addition of licensed beds across Singapore, Malaysia will also augment longer-term profitability and cashflows,&rdquo the analysts say.

 

Despite trading at a premium to its peers, TMG is expected to deliver EBITDA growth with a CAGR of 11% between FY2024 and FY2026, much stronger than some of its peers with maturing operations.

 

They&rsquo ve given the stock, which last traded at 6 cents, a fair value estimate of 8 cents, based on 23x FY25 EBITDA, which is 0.5SD below the historical mean. 

Report by DBS today 

Thomson Medical Group Ltd: Discovering a diamond in the rough

• Singapore homegrown healthcare company approaching a strong growth trajectory 
• Inorganic growth propelled by FV hospital acquisition and more M& A activities in the pipeline
• Strong portfolio of healthcare assets in Singapore and Malaysia with potential to expand footprint in IVF
• High leverage a primary concern but should be alleviated by strong EBITDA growth in FY24-26F

Investment Thesis:  Strong portfolio of healthcare assets in Singapore and Malaysia with potential to expand footprint in IVF.  With the flagship Thomson Medical Centre and 37 clinics and centres in Singapore, Thomson Medical Group (TMG) has in place plans to widen and deepen its roots in the healthcare industry. Thomson Medical Group has a strong reputation as one of the largest private providers of healthcare services for women and children in Singapore. TMG&rsquo s niche focus on O& G places it in a prime position to grow its presence in the in vitro fertilisation (IVF) market across APAC. Aside from O& G, TMG aspires to expand its medical specialty and progressively flourish into a reputable full healthcare service provider. Inorganic growth propelled by FV hospital acquisition and potential M& A activities in the pipeline.  The acquisition deepens TMG&rsquo s footprint in South-East Asia (SEA), drives its geographic diversification, and spurs growth, with healthcare expenditure per capita in Vietnam registering a higher CAGR of 9.2% between 2017-2022 compared to other countries in the region. We understand the group remains on the lookout for further M& A opportunities in  countries such as Thailand, Indonesia, and Cambodia, to expand its pan-Asian footprint, but also seeks to de-risk via partnerships. Revenue and EBITDA growth forecasted at CAGRs of 12% and 11% between 2024-2026.  We believe TMG will be driven by a mix of organic and inorganic growth levers. The acquisition of FV hospital is estimated to grow its top line and EBITDA by 26% and 19% in FY25F. This also adds 230 licensed beds, which brings total licensed beds up to 757 (+44%). In the medium term, the planned addition of licensed beds across Singapore, Malaysia will also augment longer term profitability and cashflows.   Fair value estimate at  S$0.08 with strong growth potential.  Our fair value estimate is based on 23x FY25 EBITDA, which is c.-0.5SD below the historical mean. Despite trading at a premium to its peers, TMG is expected to deliver EBITDA growth with a CAGR of 11% between FY24-FY26, much stronger than some of its peers with maturing operations.

THOMSON Medical : A50 0% has obtained from the Singapore Exchange an extension of one month to Jan 10, 2024 to explore options to restore the public float without suspending trading in its shares.

 

In a filing on Thursday (Dec 7), the medical services provider also set out the conditions for the grace period from the bourse operator &ndash to continue monitoring the public float and trading activity in its shares, and to immediately request a trading halt if there is any indication of disorderly trading.

 

Earlier, the frontline regulator had granted Thomson Medical three months to Dec 10, 2023 for the public float to be restored.

 

Thomson Medical&rsquo s public float slipped to 9.98 per cent in September. Listing rules mandate that at least 10 per cent of a listed company&rsquo s shares must be held by public investors.

 

Thomson Medical shares closed flat at S$0.056 on Thursday, before the announcement.