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ISEC Healthcare 3QFY2024 earnings up by 11% y-o-y at $4.3 mil
ISEC Healthcare has reported earnings of $4.3 million in 3QFY2024 ended September, up by 11% y-o-y.
This came on the back of the group experiencing a foreign exchange gain of $0.82 million in 3QFY2024 as compared to foreign exchange loss of $0.03 million in 3QFY2023.
Meanwhile, the group&rsquo s revenue in 3QFY2024 saw an increase of 5% y-o-y to $0.91 million, due to the increase of revenue contributed by the group&rsquo s specialised health services segment following an increase in business activities.
Similarly, gross profit stood at $8.1 million in 3QFY2024, while gross profit margin saw a 1.9% decline to 42.8% in the same period from 44.7% in 3QFY2023. This was mainly due to an increase in business operating costs.
ISEC Healthcare seeks regional growth in eyecare space
The global eyecare industry is growing rapidly due to an ageing population and rising eye disease rates. The Vision Atlas report by the International Agency for the Prevention of Blindness (IAPB) predicts a 55% increase in vision loss over the next 30 years, affecting 600 million more people.
The IAPB attributes rising vision loss to an ageing population and lifestyle changes. Vision issues like cataracts, macular degeneration and glaucoma increase with age. By 2050, the global population over 65 is expected to rise from one in 11 to one in six, exacerbating this problem.
In terms of lifestyle changes, IAPB cites factors such as &ldquo more sedentary and indoor lifestyles, less-nutritious foods and resulting obesity&rdquo , which have all contributed to a surge in the prevalence of myopia and diabetes.
It requires more than visits to the local optician to treat these issues. Eye specialists or ophthalmologists who provide a higher level of eyecare are hence now highly sought after in the industry, says Dr Wong Jun Shyan, CEO of Malaysia-based ISEC Healthcare .
ISEC was incorporated in 2007 by Wong and a group of other ophthalmologists. The team grew from just seven in 2007 to about 10 when the company was listed on the Singapore Exchange in 2014. Since then, the team has increased to over 40 ophthalmologists operating in 10 speciality eye centres (eight in Malaysia, one in Singapore and one in Myanmar) as of the end of 2023. Down the road, the company is eyeing further growth in Cambodia and Vietnam.
&ldquo In 2007, private eye healthcare (in Malaysia) was mostly provided by doctors based in hospitals. They are usually independent contractors renting a clinic space within the hospital,&rdquo Wong explains. As such, it is hard for these single healthcare operators to deliver a more sophisticated level of ophthalmology because they do not have economies of scale &mdash they can only deliver their individual professional services.
ISEC aims to solve that issue by creating a &ldquo centre of excellence&rdquo focusing on ophthalmology. By banding up together, Wong and the other doctors improved economies of scale, especially regarding equipment and machinery investment. &ldquo We would then have the latest and the best technologies. There are also a lot of sub-specialities within ophthalmology that require more support for more complex work,&rdquo he explains.
Vision becoming a reality
Over the years, ISEC Healthcare grew organically and via acquisitions. The most recent was in May 2022 of Ipoh Eye Specialist Group, the largest private eyecare provider in Perak, Malaysia. The acquisition brought two operating clinics into the fold, with another three in the pipeline.
&ldquo We are pleased with this acquisition, as the operating clinics were performing well and continued to do so after the acquisition. We were able to integrate well. The three other clinics that have yet to open are also expected to launch sometime this year,&rdquo says Wong.
However, if ISEC Healthcare were to start anew in a new market, it would be tougher, due to the highly regulated nature of the healthcare industry, regardless of which country. The gestation period, from when a site is identified until the day it starts to operate, could take at least a year.
The group&rsquo s latest greenfield expansion was its 51%-owned ISEC eye specialist clinic in Kuching, Sarawak, which obtained the operating licence from Malaysia&rsquo s Ministry of Health in March 2023 and commenced operations in the same month.
More significantly, ISEC Healthcare last December signed a sale and purchase agreement for the proposed acquisition of strata-titled units or parcels totalling 69,445 sq ft within a 15-storey building with two lower-ground levels that will be a purpose-built medical centre.
The new building is located at Bangsar South Township in Kuala Lumpur. &ldquo We expect to move from our current leased premises in Mid Valley City, Kuala Lumpur, which has a floor space of about 26,763 sq ft, to this new location, which is about 2.5 times bigger. The additional floor space in the new premises will enable the group to serve more patients and expand the depth and breadth of its health services,&rdquo notes ISEC&rsquo s FY2023 annual report.
ISEC Healthcare believes owning units in this purpose-built building will bring longer-term benefits, such as reduced lease expenses and better control over its use.
&ldquo We have saved up some cash and wanted better stability without worrying about changing landlords or increasing rent. It is difficult for healthcare facilities to port because of our heavy and fragile equipment. We cannot be moving every 10 years,&rdquo says Wong, who expects this new space to start operating in about three years.
The newly acquired space will also be used as ISEC Healthcare&rsquo s new headquarters and a base for further growth. Wong is aiming to hire more specialists to join the group. The way he sees it, the rate of ISEC&rsquo s greenfield expansion will depend on the number of specialist doctors that can be hired.
Overview of growth plans
In 2019, ISEC Healthcare became a subsidiary of Aier Eye International (Singapore) after acquiring a 56.53% stake in ISEC Healthcare for 36 cents per share. As of June 3, Aier has a 57.14% stake in ISEC. Aier is a wholly owned subsidiary of China&rsquo s Aier Eye Hospital Group, which is listed on the Shenzhen Stock Exchange.
&ldquo This represents a good opportunity for ISEC because Aier is a listed company, is transparent and has a good brand name. They are the world&rsquo s largest provider of eyecare services and own hundreds of hospitals in China,&rdquo says Wong.
Wong says Aier was on an expansion spree when ISEC caught its eye. Before its ISEC stake acquisition, Aier acquired Spanish-based Clinica Baviera Group, an eyecare chain in Europe with 76 centres, for about EUR152 million ($222.2 million). This is the largest merger in the international eyecare industry.
By leaning on Aier&rsquo s reputation, Wong says ISEC has received a &ldquo tremendous advantage in negotiating&rdquo for equipment and machinery pricing. Being the largest eye healthcare provider, Aier has also contributed, through its global experience, to support and improve ISEC&rsquo s business processes.
In its latest FY2023 ended December 2023, ISEC recorded earnings of $13.0 million, some 4% higher than $12.5 million a year ago. Revenue saw an 11% y-o-y increase to $70.0 million, thanks to higher contributions from its specialised health services segment. More specifically, ISEC Healthcare has handled a significant increase in patient visits by lifting international travel restrictions and easing movement control measures in Singapore, Malaysia, and Myanmar since 2H2022.
The segment performance was further boosted by full-year contributions from IE Centre and Kampar Eye, the two operating clinics under the Ipoh Eye Specialist Group, as well as partial contributions from the clinic in Kuching added in FY2023.
However, it was partially offset by a decline in revenue from the general health services segment due to the reduction in Covid-19 swab tests, which aligns with the easing situation and already high rates of Covid-19 vaccination achieved among the regional populace.
Geographically, Malaysia remains ISEC Healthcare&rsquo s main revenue generator, contributing about 80% to its topline in FY2023, while Singapore contributed 17%, with the remaining from its Myanmar operations.
The company declared a final dividend of 0.85 cents, bringing the full-year payout to 1.61 cents for FY2023, equivalent to a payout ratio of 33.6%. In contrast, it paid 1.56 cents for the preceding year.
Since its inception in 2014, ISEC has maintained a strong balance sheet, allowing it to fulfil its expansion plans while dishing out attractive dividends, observe SAC Capital analysts June Yap and Matthias Chan in a June 6 report. The analysts have initiated a &ldquo buy&rdquo call and 44 cents target price on the stock.
Besides the attractive yield, they are upbeat about ISEC Healthcare&rsquo s prospects, especially in Malaysia, with the upcoming new space boosting its capacity to take more patients. &ldquo With increasing demand for ophthalmology services in the region, strategic plans to expand into existing and new markets and the group&rsquo s effort to enlarge their highly-specialised talent pool, positions it well for sustainable growth,&rdquo say Yap and Chan, who also see potential in the group&rsquo s expansion plans to emerging markets in the coming years.
SAC Capital initiates &lsquo buy&rsquo on ISEC Healthcare with S$0.44 price target
ISEC Healthcare Ltd. is a leading regional provider of comprehensive medical eye care services with ambulatory surgical centers. With over 15 years of experience, it operates in Malaysia, Singapore and Myanmar, providing advanced treatments through a team of specialist doctors at well-equipped centers. Listed on the Catalist board of the Singapore Exchange in 2014, ISEC Healthcare has expanded its market presence and, in 2019, became a subsidiary of Aier Eye International (Singapore) Pte. Ltd., part of China' s Aier Eye Hospital Group, listed on the Shenzhen Stock Exchange.
For 1Q24, the Group sustained its revenue and net profit at levels comparable to its record years. Following a double-digit growth in both topline and bottom-line for FY22, the Group reported strong results for FY23, achieving a revenue of S$70m and a net profit of S$13.2m, marking a +3.3% y/y and setting a new record since its IPO in 2014. In 1Q24, the Group posted a revenue of S$16.9m and a net profit of S$3.2m, maintaining a stable performance y/y and q/q.
In the medium term, we are upbeat about the prospects of ISEC Healthcare&rsquo s continued expansion, particularly in Malaysia. In December 2023, the Group signed a S& P agreement to the proposed acquisition of certain parcels in a new 15-storey building with 2 lower ground floors at Bangsar South Township, Kuala Lumpur. The new premises will be c.2.5X its existing clinic size in KL. With increasing demand for ophthalmology services in the region, strategic plans to expand into existing and new markets and the Group&rsquo s effort to enlarge their highly-specialized talent pool, positions it well for sustainable growth.
Potential risks include i) political instability in Myanmar affecting operations and ii) exposure to currency fluctuations, particularly in Malaysia and Myanmar.
BUY target price at S$0.44, an upside of 15% from current levels. Our TP is based on comparable company analysis and implies a PE of c.15.5, which is close to the Group&rsquo s historical average.
ISEC Healthcare eyes growth and maintains attractive dividend, says SAC Capital
ISEC Healthcare, a relatively low-profile SGX-listed healthcare counter, is gearing up for a big expansion with an eye on growing regional demand for its services while paying out a steady dividend income stream, says SAC Capital analysts June Yap and Matthias Chan in a non-rated note on March 18.
Incorporated in 2014, ISEC Healthcare 40T 0.00% provides medical eye care services ranging from cataract, Lasik to complex corneal transplantation surgeries.
For FY2023, the company increased its revenue by 11.2% y-o-y to $70 million and earnings by 3.3% y-o-y to $13.2 million, thanks to stronger demand for speciality eye care services in Singapore, Malaysia and other emerging countries in Southeast Asia.
Over 70% of ISEC Healthcare' s sales come from Malaysia with around 50% of its Malaysia&rsquo s sales coming from its flagship center in Mid-Valley, Kuala Lumpur.
To meet the demand in Mid-Valley, ISEC plans to build a new 15-storey building that will at least triple its clinical space. In addition, there are plans to open at least 4 more centres outside of Klang Valley. " ISEC is well-positioned to capitalize on Malaysia&rsquo s population size of 33.5 million," the analysts write.
They also note that between 2020 and 2023, the company tripled its earnings to $13.2 million, using an asset-light business model which Yap and Chan believe will be sustainable.
The analysts believe there' s strong potential in emerging Indochina.
" Using its Singapore and Malaysia franchise as a springboard, its scalable business model and the expertise to operate eye centres in these emerging markets has allowed ISEC to explore rolling out expansion plans to emerging markets in the coming years," write the analysts.
For FY2023, the company has declared a final dividend of 0.85 cents, which compares with 1.08 cents per share paid for FY2022.
The SAC analysts point out that ISEC has a track record of paying an attractive dividend payout to shareholders while its strong balance sheet, with a net cash of $17.2 million as at end 2023, gives it the strength to fund its expansion plans and simultaneously reward shareholders with dividends.
ISEC Healthcare expects Q2 loss ' significantly lower profit' for H1
MEDICAL eye care services provider ISEC Healthcare on Monday night said the group is expected to report a net loss for the three months ended June 30, along with a " significantly lower profit" for the first half of fiscal 2020.
This is based on a preliminary review of the group' s unaudited financial results, the Catalist-listed firm said in a regulatory filing.
The expected net loss for Q2 is mainly due to an impairment loss of goodwill relating to the general health services business segment.
Meanwhile, the lower profit for H1 is mainly attributable to a decline in revenue, as a result of decreased business activities from the group' s specialised health services segment amid the Covid-19 outbreak, ISEC Healthcare said.
The firm added that it is still in the process of finalising its results and will provide further details when it announces its unaudited financial results for Q2 and H1 on, or before Aug 14.
ISEC Healthcare' s chief executive officer (CEO) and certain shareholders of the company are at an advanced stage of negotiations with a third-party purchaser for the sale of part of their shares in the company, Isec Healthcare said in a filing to the Singapore Exchange on Tuesday.
The potential transaction, if completed, is likely to lead to an offer for the shares of the company in due course.
Isec received the notification from executive director and CEO Wong Jun Shyan for himself and on behalf of certain shareholders of the company who are also employees, including executive vice-chairman Lee Hung Ming.
" No definitive sale-and-purchase agreement has been entered into in respect of the potential transaction," Isec Healthcare warned. " If any definitive sale-and-purchase agreement is entered into, such agreement may also be conditional in nature and there is no assurance that any potential transaction will be completed or that an offer will be made in due course."
Slowly realising the value
Am happy for you daryl25.
daryl25 ( Date: 27-Feb-2019 17:44) Posted:
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Hi nqing87, sure i will continue to share my personal research on this forum.
Also, thanks for your encouragement.
Do to others as you would other do unto you!
Also, thanks for your encouragement.
Do to others as you would other do unto you!
nqing87 ( Date: 27-Feb-2019 17:34) Posted:
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I have this stock for 3 years now. Collecting dividend yearly. I'm rather comfortable with their way of managing the company. Price does not fluctuate much. Inclusive of dividends collected, my share value is +20% even though share price is almost same, but I have no worries because of below points.
No debt
Gives above average dividend
Revenue and profit rising every quarter since the day I started collecting
Expansion is at a comfortable pace without trying to grab headlines
Aging population in areas of operation
No debt
Gives above average dividend
Revenue and profit rising every quarter since the day I started collecting
Expansion is at a comfortable pace without trying to grab headlines
Aging population in areas of operation
hi joseph, do continue to share your fundamental analysis.. my investment criteria is actually rather similar as yours in that i look at some crucial parameters like p/e ratio, dividends, net debt vs cash, revenue/profit trend, NAV (to less extent depending on what sector we are talking about).. While investing should be looking at fundamentals, often investors who seek fundamental analysis like us dont get rewarded.. we can invest in stocks that are good in all these parameters but may still cause us to incur opportunity cost when other counters with weaker fundamentals move up faster.. in certain case, undervalue fundamentally good counters can continue to drop in share price due to weak market sentiment in that sector or investors being unaware of the presence of such undervalue counter and cause capital loss.. such is stock market and i hope majority of investors here invest by fundamentals and not be buying base on hype/baseless predictions which is hard to measure
josephyeo ( Date: 27-Feb-2019 17:11) Posted:
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Thank you Alexchew for your fair comments. You are right, I am definitely too small a player
to be able to drive up the share price.
My desire to share was motivated by the facts that too many people loose money in the mkt
bcoz they invest without doing due diligence. I present the facts with a hope that people will
invest in a more educated way. I am not always right, which is impossible, but its always a
calculated investment.
My choice is based on very basic simple criterias ... revenue trend, profit trend, dividend yield,
nta, debt against cash, historical high n low against current price, management comments etc.
Its a defensive form of investment. Despite all these, things can still go wrong.
Just sharing n wish all forumers all the best!
to be able to drive up the share price.
My desire to share was motivated by the facts that too many people loose money in the mkt
bcoz they invest without doing due diligence. I present the facts with a hope that people will
invest in a more educated way. I am not always right, which is impossible, but its always a
calculated investment.
My choice is based on very basic simple criterias ... revenue trend, profit trend, dividend yield,
nta, debt against cash, historical high n low against current price, management comments etc.
Its a defensive form of investment. Despite all these, things can still go wrong.
Just sharing n wish all forumers all the best!
alexchew ( Date: 27-Feb-2019 16:13) Posted:
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all business has goodwill, only whether it is proper... Any funny biz going on.. I dont think josphe has any other agendas than sharing.. Its super impossible to drive up the share price via any forums.. He shared his opinion on why he buy, justifications for his investments.
Personally, i do not like medical stocks, due to the high goodwill and " non-transparent remunerations paid to doctors" . I flagged out high risk in goodwill for O& G way before it got impaired.. No payback analysis given to the shareholders on such purchases, since the doctor will move from profit to part salary base cum profit once acquired. Goodwill depends on age of doctor/location/relationship with the new management/reputation etc and its human nature you are capitalising. Its not even a perpetual brand...
Personally, i do not like medical stocks, due to the high goodwill and " non-transparent remunerations paid to doctors" . I flagged out high risk in goodwill for O& G way before it got impaired.. No payback analysis given to the shareholders on such purchases, since the doctor will move from profit to part salary base cum profit once acquired. Goodwill depends on age of doctor/location/relationship with the new management/reputation etc and its human nature you are capitalising. Its not even a perpetual brand...
Wind22i ( Date: 27-Feb-2019 15:53) Posted:
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Finally .. someone who give a good comment rather than an "own agenda" base comment like our friend joseph.
And sgx etc shld query or launch an investigation on their goodwill and impairment
bayduck ( Date: 27-Feb-2019 14:37) Posted:
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Thank you for your inputs.
The 9% yield is based on annualised dividend of 2.54 cts.
The 9% yield is based on annualised dividend of 2.54 cts.
bayduck ( Date: 27-Feb-2019 14:37) Posted:
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Interesting business with clean balance sheet. Took a quick look at the business at the suggestion of my friend, but I still don' t feel comfortable paying 10x EBITDA or or 2.3x book for this business, even for a healthcare business. My key concern relates to the company' s acquisitive nature:
1) Purchased SSEC in 2015, at ~12x PAT, with ~70% of consideration done through issuance of shares at $0.23
2) Purchased JLM companies in 2016, at ~12x PAT, with 50% of consideration done through issuance of shares at $0.25
3) Purchased 25% stake in I Medical in 2018 for $250K cash (small deal compared to the above). No details on I Medical' s P& L, but it' s a net liability business
Collectively, the goodwill arising from the acquisitions now constitute ~50% of total assets. My issues are:
1) Risk of overpaying for the deals. Should the risk materialize, could see an impairment to the goodwill. For perspective, the JLM deal also included a 5-year profit guarantee by the vendors. For the first year post-acquisition, the clinics underperformed the profit threshold by ~20%. While the vendors will make up for the 20% (and also subsequent shortfalls for next 4 years), should the underperformance be persistent, I expect goodwill to be impaired once the guarantee lapses.
2) Why use stock as a currency for the M& A? If the common stock of ISEC is indeed undervalued, it' s not really a shareholder-friendly decision to finance the deals with so much issuance of shares. For SSEC and JLM, shares were issued at prices between $0.23 and $0.25. I would very much prefer that the management finance the deals through some borrowings, or better still, self-finance the deals through operating cashflows.
Taking such issues into account, the maximum price I' m willing to pay is ~$0.20, or at implied price to book of 1.7x. Also, I' m not sure how is the dividend yield 9%. The final dividend is 0.78 cents, with special dividend of 0.98 cents. So dividend yield should be ~2.8%? Even if we take into account special dividend (which we shouldn' t since it' s one-off), the dividend yield is ~6.2% (at current share px of $0.28)
I don' t think one will go too wrong by investing in ISEC though, because the fundamentals are rather ok. Just that I' m not comfortable with the upside/downside tradeoff at current valuations - just my personal view.
1) Purchased SSEC in 2015, at ~12x PAT, with ~70% of consideration done through issuance of shares at $0.23
2) Purchased JLM companies in 2016, at ~12x PAT, with 50% of consideration done through issuance of shares at $0.25
3) Purchased 25% stake in I Medical in 2018 for $250K cash (small deal compared to the above). No details on I Medical' s P& L, but it' s a net liability business
Collectively, the goodwill arising from the acquisitions now constitute ~50% of total assets. My issues are:
1) Risk of overpaying for the deals. Should the risk materialize, could see an impairment to the goodwill. For perspective, the JLM deal also included a 5-year profit guarantee by the vendors. For the first year post-acquisition, the clinics underperformed the profit threshold by ~20%. While the vendors will make up for the 20% (and also subsequent shortfalls for next 4 years), should the underperformance be persistent, I expect goodwill to be impaired once the guarantee lapses.
2) Why use stock as a currency for the M& A? If the common stock of ISEC is indeed undervalued, it' s not really a shareholder-friendly decision to finance the deals with so much issuance of shares. For SSEC and JLM, shares were issued at prices between $0.23 and $0.25. I would very much prefer that the management finance the deals through some borrowings, or better still, self-finance the deals through operating cashflows.
Taking such issues into account, the maximum price I' m willing to pay is ~$0.20, or at implied price to book of 1.7x. Also, I' m not sure how is the dividend yield 9%. The final dividend is 0.78 cents, with special dividend of 0.98 cents. So dividend yield should be ~2.8%? Even if we take into account special dividend (which we shouldn' t since it' s one-off), the dividend yield is ~6.2% (at current share px of $0.28)
I don' t think one will go too wrong by investing in ISEC though, because the fundamentals are rather ok. Just that I' m not comfortable with the upside/downside tradeoff at current valuations - just my personal view.
Repost.
ISEC porduces a good set of results n declares a generous dividend. See below:
1. revenue up - from S$36.9 to S$40.4 mil
2. profits up - from S$7.9 mil to S$8.7 mil
3. dividend up - from 1.2 cts to 2.54 cts annualised
4. cash up - from S$24.8 mil to S$27.1 mil
Base on current price of 28.0 cts, the dividend yield is 9.0%
Just sharing ... vested.
ISEC porduces a good set of results n declares a generous dividend. See below:
1. revenue up - from S$36.9 to S$40.4 mil
2. profits up - from S$7.9 mil to S$8.7 mil
3. dividend up - from 1.2 cts to 2.54 cts annualised
4. cash up - from S$24.8 mil to S$27.1 mil
Base on current price of 28.0 cts, the dividend yield is 9.0%
Just sharing ... vested.
I am surprised that you are into stocks that i am in ... Valuetronics . My 1st post on valuetronics
was as early as 2014. Is Valuetronics a " bullshit" company? See below my last post on 9 Mar 2018:
josephyeo ( Date: 09-Mar-2018 13:22) Posted:
" Valuetronic is another company i posted on 2 Jan 2014. At time of post it was trading at 22.6 cts.
Today, 9 Mar 2018, the price is 96 cts ... more than 4 times. A multibagger."
Guess the companies i posted are not " bullshits" . Right?
was as early as 2014. Is Valuetronics a " bullshit" company? See below my last post on 9 Mar 2018:
josephyeo ( Date: 09-Mar-2018 13:22) Posted:
" Valuetronic is another company i posted on 2 Jan 2014. At time of post it was trading at 22.6 cts.
Today, 9 Mar 2018, the price is 96 cts ... more than 4 times. A multibagger."
Guess the companies i posted are not " bullshits" . Right?
Wind22i ( Date: 26-Feb-2019 17:27) Posted:
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only joseph and the company interest in this bullshit share...