Thomson Medical – AmFraser

Q3 Results Stronger than Expected

• Q3 beat our forecast. Thomson Medical Centre (“TMC”) announced a 25.4% YoY rise in FY2010 Q3 revenue to S$21.8m. NPAT for the quarter came to S$4.9m, a rise of 43.5% YoY. Strong patient load and contributions from the new Cancer Centre and Paediatric Centre are helping to shape FY2010 as TMC’s strongest yet.

• Childbirths holding steady. After peaking at 2,478 births in Q1, the number of childbirths remained steady at 2,207 and 2,291 in Q2 and Q3 respectively. The economic recovery should continue to underpin revenue growth from both local and foreign patients. Management has shown great finesse and creativity in squeezing efficiency out of existing space but we should be careful when diminishing marginal returns set in.

• Brandname attracting senior specialists. 2 senior specialists commenced tenancy in May. Management had been excited about this development as the specialists would be able to increase patient referrals and utilisation of hospital services. Moreover, we believe the best people to ‘advertise’ for the Company are the senior specialists who vote with their own reputation and commitment.

• Vietnam hospital soft opening on track. TMC’s first consultancy and management project in Hanh Phuc is targeted to have its soft opening in Oct 2010. This would be well into Q1FY2011 and we already expect any meaningful contribution to come only in FY2012. Being the first of three Vietnam hospitals to be built under the agreement, there may be a learning curve to scale. We expect things to be smoother when the 2nd hospital in Hanoi comes around.

• Maintain ‘ACCUMULATE’ and raise FV to 79.5 SG cents. The stronger-than-expected Q3 leads us to raise our FY10 revenue and NPAT forecasts to S$79.0m and S$15.7m. FY11 and FY12 NPAT forecasts are also raised slightly by 2.6% and 1.8% respectively. The next significant catalyst that we expect to see on the horizon are more concrete plans for the 2nd hospital project in Hanoi. Our FV is raised to 79.5 SG cents and recommendation remains at ACCUMULATE.

Thomson Medical – AmFraser

Q3 Results Stronger than Expected

• Q3 beat our forecast. Thomson Medical Centre (“TMC”) announced a 25.4% YoY rise in FY2010 Q3 revenue to S$21.8m. NPAT for the quarter came to S$4.9m, a rise of 43.5% YoY. Strong patient load and contributions from the new Cancer Centre and Paediatric Centre are helping to shape FY2010 as TMC’s strongest yet.

• Childbirths holding steady. After peaking at 2,478 births in Q1, the number of childbirths remained steady at 2,207 and 2,291 in Q2 and Q3 respectively. The economic recovery should continue to underpin revenue growth from both local and foreign patients. Management has shown great finesse and creativity in squeezing efficiency out of existing space but we should be careful when diminishing marginal returns set in.

• Brandname attracting senior specialists. 2 senior specialists commenced tenancy in May. Management had been excited about this development as the specialists would be able to increase patient referrals and utilisation of hospital services. Moreover, we believe the best people to ‘advertise’ for the Company are the senior specialists who vote with their own reputation and commitment.

• Vietnam hospital soft opening on track. TMC’s first consultancy and management project in Hanh Phuc is targeted to have its soft opening in Oct 2010. This would be well into Q1FY2011 and we already expect any meaningful contribution to come only in FY2012. Being the first of three Vietnam hospitals to be built under the agreement, there may be a learning curve to scale. We expect things to be smoother when the 2nd hospital in Hanoi comes around.

• Maintain ‘ACCUMULATE’ and raise FV to 79.5 SG cents. The stronger-than-expected Q3 leads us to raise our FY10 revenue and NPAT forecasts to S$79.0m and S$15.7m. FY11 and FY12 NPAT forecasts are also raised slightly by 2.6% and 1.8% respectively. The next significant catalyst that we expect to see on the horizon are more concrete plans for the 2nd hospital project in Hanoi. Our FV is raised to 79.5 SG cents and recommendation remains at ACCUMULATE.

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