Category: Thomson

 

Thomson Medical – BT

Thomson Med sanguine about FY2011 results

MOH suspension of fertility unit to have no material impact

THOMSON Medical Centre yesterday said that the suspension of its fertility treatment unit would not have a material impact on current year financial results, as it does not expect any significant transfer of existing patients to other assisted reproduction centres.

In a statement to the Singapore Exchange, Thomson Medical said that the suspended unit, Thomson Fertility Centre (TFC), accounted for 4.4 per cent of the group’s revenue in the last financial year. For the year ended Aug 31, it accounted for 5.9 per cent of Thomson Medical’s after-tax profit.

The group was in the limelight last week, first for being the subject of a $513 million buyout by former ‘remisier king’ Peter Lim and then for a botched invitro-fertilisation (IVF) treatment at its wholly owned subsidiary.

A wrong sperm was used in the procedure, which resulted in the baby having his mother’s genetic make-up but not his father’s. Following lapses identified during an audit, the Ministry of Health has directed the centre to stop initiating fresh cycles of assisted reproduction treatment.

Under the directive, patients who have started on their treatment cycles can either opt to continue with TFC or transfer to another AR centre.

‘So far, those we have spoken to have indicated that they will continue their treatment in TFC,’ Thomson Medical said.

The group added that it would apply for the suspension to be lifted as soon as possible. It intends to carry out the additional processes recommended by the authorities and will be inviting MOH to review the implementation.

The group posted a full-year net profit of $15.88 million, 24.2 per cent higher than a year ago. For the 12 months ended August, revenue rose 21.2 per cent to $81.67 million.

Despite news of the IVF incident, Thomson Medical’s share price has held steady at $1.75, as Mr Lim snapped up more shares from the open market. Since announcing his general offer, at $1.75 per share or a 62 per cent premium, Mr Lim has amassed 57.61 per cent of the private healthcare services provider. The counter closed unchanged yesterday at $1.75 with 2.56 million shares changing hands.

Thomson Medical – BT

Thomson Med sanguine about FY2011 results

MOH suspension of fertility unit to have no material impact

THOMSON Medical Centre yesterday said that the suspension of its fertility treatment unit would not have a material impact on current year financial results, as it does not expect any significant transfer of existing patients to other assisted reproduction centres.

In a statement to the Singapore Exchange, Thomson Medical said that the suspended unit, Thomson Fertility Centre (TFC), accounted for 4.4 per cent of the group’s revenue in the last financial year. For the year ended Aug 31, it accounted for 5.9 per cent of Thomson Medical’s after-tax profit.

The group was in the limelight last week, first for being the subject of a $513 million buyout by former ‘remisier king’ Peter Lim and then for a botched invitro-fertilisation (IVF) treatment at its wholly owned subsidiary.

A wrong sperm was used in the procedure, which resulted in the baby having his mother’s genetic make-up but not his father’s. Following lapses identified during an audit, the Ministry of Health has directed the centre to stop initiating fresh cycles of assisted reproduction treatment.

Under the directive, patients who have started on their treatment cycles can either opt to continue with TFC or transfer to another AR centre.

‘So far, those we have spoken to have indicated that they will continue their treatment in TFC,’ Thomson Medical said.

The group added that it would apply for the suspension to be lifted as soon as possible. It intends to carry out the additional processes recommended by the authorities and will be inviting MOH to review the implementation.

The group posted a full-year net profit of $15.88 million, 24.2 per cent higher than a year ago. For the 12 months ended August, revenue rose 21.2 per cent to $81.67 million.

Despite news of the IVF incident, Thomson Medical’s share price has held steady at $1.75, as Mr Lim snapped up more shares from the open market. Since announcing his general offer, at $1.75 per share or a 62 per cent premium, Mr Lim has amassed 57.61 per cent of the private healthcare services provider. The counter closed unchanged yesterday at $1.75 with 2.56 million shares changing hands.

Healthcare – OCBC

Another takeover bid highlights attractiveness

Higher value addition in 2009. The total operating surplus of Singapore’s health services industry increased 7.1% to S$995m in 2009, according to a recent study by the Department of Statistics. This was due to a 8.3% increase in operating receipts to S$8.20b, partially offset by a 9.1% rise in operating expenditure to S$7.57b. Overall, the total value addition generated by the health services industry was S$4.37b, representing an increase of 7.3% over 2008.

Privatisation fervour highlights increasing sector attractiveness. Parkway Holdings announced its proposal to be delisted after the successful acquisition by Khazanah Nasional. We believe that Thomson Medical Centre (TMC) could follow suit after prominent investor Peter Lim’s general offer to acquire its shares at S$1.75 a piece. This represents an attractive 62.0% premium to its closing price prior to the takeover announcement, and values TMC at 33.5x PER. As this is substantially higher than TMC’s 15.0x historical average PER, shareholders would likely accept the offer, in our opinion. This is a testament of the high quality of healthcare providers here and has generated renewed hype in the healthcare sector. The spillover effects were seen in Raffles Medical Group’s (RMG) share price rising 5.5% (current PER of 26.4x) on the next trading day after the announcement.

Medical device industry performing well too. Medical device companies have benefited from the rising incidence of diseases. Technological expertise and safety are key differentiating factors. Biosensors International Group (BIG), for example, is technologically superior to its peers, in our view, because of its biodegradable polymer drug-eluting stent. It has also recently increased its capabilities with the acquisition of Devax Inc., allowing it to treat bifurcation lesions now.

Increasing regional competition. Many regional countries are vying for the lucrative medical tourism business. The Union Tourism Ministry of India has estimated that its medical tourism sector could be worth more than US$2b by 2012. However, India is mainly targeting the Americans whereas Singapore healthcare providers serve mainly patients from neighbouring countries such as Indonesia and Malaysia. Healthcare providers here also have a competitive edge in terms of being able to offer sophisticated and higher quality medical procedures. We have a HOLD rating on RMG [FV: S$2.35] because we believe current market valuations have already factored in its strong fundamentals. On the other hand, we have a BUY rating on BIG [FV:S$1.30]. We like BIG for its cutting-edge technology and strategy in coming up with innovative new products to stay ahead of its competition.

Healthcare – OCBC

Another takeover bid highlights attractiveness

Higher value addition in 2009. The total operating surplus of Singapore’s health services industry increased 7.1% to S$995m in 2009, according to a recent study by the Department of Statistics. This was due to a 8.3% increase in operating receipts to S$8.20b, partially offset by a 9.1% rise in operating expenditure to S$7.57b. Overall, the total value addition generated by the health services industry was S$4.37b, representing an increase of 7.3% over 2008.

Privatisation fervour highlights increasing sector attractiveness. Parkway Holdings announced its proposal to be delisted after the successful acquisition by Khazanah Nasional. We believe that Thomson Medical Centre (TMC) could follow suit after prominent investor Peter Lim’s general offer to acquire its shares at S$1.75 a piece. This represents an attractive 62.0% premium to its closing price prior to the takeover announcement, and values TMC at 33.5x PER. As this is substantially higher than TMC’s 15.0x historical average PER, shareholders would likely accept the offer, in our opinion. This is a testament of the high quality of healthcare providers here and has generated renewed hype in the healthcare sector. The spillover effects were seen in Raffles Medical Group’s (RMG) share price rising 5.5% (current PER of 26.4x) on the next trading day after the announcement.

Medical device industry performing well too. Medical device companies have benefited from the rising incidence of diseases. Technological expertise and safety are key differentiating factors. Biosensors International Group (BIG), for example, is technologically superior to its peers, in our view, because of its biodegradable polymer drug-eluting stent. It has also recently increased its capabilities with the acquisition of Devax Inc., allowing it to treat bifurcation lesions now.

Increasing regional competition. Many regional countries are vying for the lucrative medical tourism business. The Union Tourism Ministry of India has estimated that its medical tourism sector could be worth more than US$2b by 2012. However, India is mainly targeting the Americans whereas Singapore healthcare providers serve mainly patients from neighbouring countries such as Indonesia and Malaysia. Healthcare providers here also have a competitive edge in terms of being able to offer sophisticated and higher quality medical procedures. We have a HOLD rating on RMG [FV: S$2.35] because we believe current market valuations have already factored in its strong fundamentals. On the other hand, we have a BUY rating on BIG [FV:S$1.30]. We like BIG for its cutting-edge technology and strategy in coming up with innovative new products to stay ahead of its competition.

Thomson Medical – BT

Healthcare stocks ride on offer news

FIRST, Parkway Holdings found itself being pursued by suitors. Now, Thomson Medical Centre, with its niche focus on obstetrics and gynaecology as well as paediatric services, has piqued the interest of Singapore’s high-profile investor Peter Lim – and this isn’t the first time that interested parties have come a-calling for Thomson Medical either.

Last week, it was announced that Mr Lim had launched a general offer for Thomson Medical at $1.75 per share, which values the company at about $513 million. This comes on the heels of Mr Lim’s purchase – via his investment holding company Sasteria – of a 39.34 per cent stake in Thomson Medical, which he bought from Thomson Medical’s founder Cheng Wei Chen and his family.

According to an announcement filed with the Singapore Exchange yesterday, Sasteria has acquired a further 3.34 per cent in the company at an average price of $1.746 a share, beefing up its stake to a total of 42.68 per cent. One of the reasons cited for Mr Lim’s interest in the company is Thomson Medical’s potential to develop further as a regional healthcare company.

So it’s probably no coincidence that the general offer comes at a point when Thomson Medical’s consultancy and management project in Vietnam – the Hanh Phuc International Women and Children Hospital in Binh Duong Province – is opening its doors, and as the group is scouring potential sites for a second hospital in Vietnam.

Closer to home, recent additions to its portfolio, such as the Thomson Women Cancer Centre and the fairly new Thomson Paediatric Centre, are making healthy contributions to the group’s financial performance. Mr Lim also holds a sizeable stake in Malaysia-based TMC Life Sciences, which specialises in fertility treatment and stem cell banking, which suggests that there are synergies to be had between Thomson Medical and TMC Life.

Mr Lim’s general offer for Thomson Medical seems to have rejuvenated interest in healthcare stocks. Shares in Thomson Medical closed at $1.75 yesterday, but other stocks in the sector have also risen since news of the general offer broke last Friday. Parkway Life Reit gained two cents to close at $1.68 yesterday. Shares in Raffles Medical shed six cents to close at $2.24 yesterday, but this is still six cents higher than Friday’s closing price. However, shares in Healthway Medical Corp remained unchanged at 15.5 cents at yesterday’s closing, after gaining 3.3 per cent in Monday’s trading session.

But the question now is whether Thomson Medical will remain listed. At an offer price of $1.75 per share – the highest share price the company has ever been valued at since it went public in 2005 – the offer is an attractive one, representing a 62 per cent premium over the last traded price prior to the announcement. It is also more than double the average closing price of 82 cents per share for the six-month period prior to the offer.

As one analyst pointed out, the pool of healthcare stocks on the SGX has been narrowing this year, with few reputable listed private healthcare players left.

Mr Lim’s bid for the company comes just some months after Malaysia’s Khazanah Nasional and India’s Fortis Healthcare were embroiled in a corporate battle for Parkway. And according to an announcement on the SGX yesterday, applications have been made to the SGX to delist Parkway. This comes on the back of Khazanah’s unit, Integrated Healthcare Holdings, announcing in mid-October that it was exercising its right of compulsory acquisition to acquire the remaining 5 per cent or so that it did not own in Parkway.

With all the interest in Parkway and Thomson Medical in recent months, investors who snapped up shares in Raffles Medical this week are clearly banking on it being next in line to be the belle of the ball.