Thomson Medical jumps on offer report

DMG advises investors to accept offer by Peter Lim

SHARES in Thomson Medical Centre shot up to $1.76 during trading yesterday before finally closing at $1.75 on last week’s news that private investor Peter Lim had launched a general offer for the company.

The closing price of $1.75 per share represents a 62 per cent increase from the previous close.

However, Thomson Medical wasn’t the only healthcare stock that made significant gains following the announcement – shares in Raffles Medical Group hit a high of $2.38 before ending the day’s trading at $2.30, up 12 cents or 5.5 per cent.

It was announced last Friday that Mr Lim is making an offer 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.

Other substantial shareholders in Thomson Medical include Harilela (Singapore) Private Limited – which holds about 17.08 per cent – and Kabouter Management, which holds around 5.01 per cent.

The cash offer is conditional on Sasteria acquiring more than 50 per cent of Thomson Medical.

BT understands that where Thomson Medical’s management is concerned, there are no plans for change.

In a report yesterday, DMG & Partners Research advised investors to accept the offer, pointing out that the offer prices the stock at 30x FY11 P/E. It also has a ‘buy’ call on Raffles Medical, with a target price of $2.40.

Mr Lim’s offer for Thomson Medical comes some months after a takeover battle played out for local hospital operator Parkway Holdings, which has 16 hospitals in Asia. In July, Malaysia’s sovereign wealth fund Khazanah Nasional made a $3.5 billion general offer for the shares in Parkway that it did not own, trumping an earlier $3.2 billion offer by India’s Fortis Healthcare. Fortis’ Malvin-der and Shivinder Singh have since gone on to acquire the healthcare businesses of Hong Kong-based Quality Healthcare Asia (QHA) – excluding QHA’s elderly healthcare businesses – for over HK$1.5 billion (S$250 million).

‘The offer price values TMC at about 29.5x consensus FY11 PER, which is almost on par with Parkway Holdings’ valuation when Khazanah launched a full takeover offer for the company in July this year at $3.95/share,’ Kim Eng said in a research report yesterday. ‘Bearing in mind that TMC’s revenue base in 2009 is 15 times smaller than Parkway’s, it seems like Peter Lim does not make a differentiation between the size and business models of the hospitals as long as he gets a piece of the action in the healthcare sector.’

The report went on to point out that Raffles Medical was ‘probably the only reputable private healthcare player left listed now’, though it also highlighted that Parkway Life Real Estate was another way to invest in the healthcare sector.

Thomson Medical jumps on offer report

DMG advises investors to accept offer by Peter Lim

SHARES in Thomson Medical Centre shot up to $1.76 during trading yesterday before finally closing at $1.75 on last week’s news that private investor Peter Lim had launched a general offer for the company.

The closing price of $1.75 per share represents a 62 per cent increase from the previous close.

However, Thomson Medical wasn’t the only healthcare stock that made significant gains following the announcement – shares in Raffles Medical Group hit a high of $2.38 before ending the day’s trading at $2.30, up 12 cents or 5.5 per cent.

It was announced last Friday that Mr Lim is making an offer 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.

Other substantial shareholders in Thomson Medical include Harilela (Singapore) Private Limited – which holds about 17.08 per cent – and Kabouter Management, which holds around 5.01 per cent.

The cash offer is conditional on Sasteria acquiring more than 50 per cent of Thomson Medical.

BT understands that where Thomson Medical’s management is concerned, there are no plans for change.

In a report yesterday, DMG & Partners Research advised investors to accept the offer, pointing out that the offer prices the stock at 30x FY11 P/E. It also has a ‘buy’ call on Raffles Medical, with a target price of $2.40.

Mr Lim’s offer for Thomson Medical comes some months after a takeover battle played out for local hospital operator Parkway Holdings, which has 16 hospitals in Asia. In July, Malaysia’s sovereign wealth fund Khazanah Nasional made a $3.5 billion general offer for the shares in Parkway that it did not own, trumping an earlier $3.2 billion offer by India’s Fortis Healthcare. Fortis’ Malvin-der and Shivinder Singh have since gone on to acquire the healthcare businesses of Hong Kong-based Quality Healthcare Asia (QHA) – excluding QHA’s elderly healthcare businesses – for over HK$1.5 billion (S$250 million).

‘The offer price values TMC at about 29.5x consensus FY11 PER, which is almost on par with Parkway Holdings’ valuation when Khazanah launched a full takeover offer for the company in July this year at $3.95/share,’ Kim Eng said in a research report yesterday. ‘Bearing in mind that TMC’s revenue base in 2009 is 15 times smaller than Parkway’s, it seems like Peter Lim does not make a differentiation between the size and business models of the hospitals as long as he gets a piece of the action in the healthcare sector.’

The report went on to point out that Raffles Medical was ‘probably the only reputable private healthcare player left listed now’, though it also highlighted that Parkway Life Real Estate was another way to invest in the healthcare sector.

Peter Lim makes GO at S$1.75

Peter Lim, Singapore’s billionaire private investor, has acquired a 39.34% stake in Thomson Medical from Dr Cheng Wei Chen and his family (founder and largest shareholder) at S$1.75/share, a 62% premium over the last traded price. The purchase was made via a married deal between Cheng and Lim’s investment holding company, Sasteria. Pursuant to Singapore’s Code on Takeovers and Mergers, the cash offer will be extended to the remaining issued shares and is conditional upon Sasteria acquiring more than 50% of the Group. Given that this prices the stock at a lofty 30x FY11 P/E, a level not seen before, we believe that investors should accept the offer.

Strong interest in healthcare. Lim has been snapping up healthcare holdings in the past few months. He took up a 29.6% stake in Malaysia-listed TMC Life, which specialises in fertility treatment and stem cell banking. He is the second largest shareholder. More recently, he accumulated a 7% stake in SGX-listed Healthway, but has since pared down to a touch below 5%. Lim is likely to seek synergies with his healthcare holdings, particularly Thomson Medical and TMC Life.

Implications for other healthcare stocks. This takeover could have a positive spillover impact on the one other major healthcare player listed on SGX – Raffles Medical Group. At S$2.18, it is currently trading at 24.5x FY11 P/E. We have a BUY on the counter, with a TP of S$2.40.

Peter Lim makes GO at S$1.75

Peter Lim, Singapore’s billionaire private investor, has acquired a 39.34% stake in Thomson Medical from Dr Cheng Wei Chen and his family (founder and largest shareholder) at S$1.75/share, a 62% premium over the last traded price. The purchase was made via a married deal between Cheng and Lim’s investment holding company, Sasteria. Pursuant to Singapore’s Code on Takeovers and Mergers, the cash offer will be extended to the remaining issued shares and is conditional upon Sasteria acquiring more than 50% of the Group. Given that this prices the stock at a lofty 30x FY11 P/E, a level not seen before, we believe that investors should accept the offer.

Strong interest in healthcare. Lim has been snapping up healthcare holdings in the past few months. He took up a 29.6% stake in Malaysia-listed TMC Life, which specialises in fertility treatment and stem cell banking. He is the second largest shareholder. More recently, he accumulated a 7% stake in SGX-listed Healthway, but has since pared down to a touch below 5%. Lim is likely to seek synergies with his healthcare holdings, particularly Thomson Medical and TMC Life.

Implications for other healthcare stocks. This takeover could have a positive spillover impact on the one other major healthcare player listed on SGX – Raffles Medical Group. At S$2.18, it is currently trading at 24.5x FY11 P/E. We have a BUY on the counter, with a TP of S$2.40.

Peter Lim goes from soccer to scalpels

Prominent investor launches general offer for Thomson Medical Centre at $1.75 a share, valuing the obstetrics and gynae services provider at about $513 million

FRESH from his foray into the soccer business, Singapore’s high-profile investor Peter Lim is now looking to find the back of the net with an investment of a different sort.

Once dubbed the ‘remisier king’, Mr Lim appears to be beefing up his investment portfolio with healthcare assets in a serious way.

Mr Lim yesterday offered to buy the rest of Thomson Medical Centre’s shares which he does not own, following his acquisition of a 39.34 per cent stake in the obstetrics and gynaecology (O&G) services provider.

The offer, at $1.75 per share, represents a 62 per cent premium over Thomson Medical’s last traded price of $1.08, and values the company at about $513 million. It is also the highest price the company’s shares have ever been valued at since its listing in 2005.

The general offer was triggered by a married deal between Sasteria Pte Ltd, an investment holding company wholly owned by Mr Lim, and the founding Cheng family. Dr Cheng Wei Chen, who is known for delivering Singapore’s first triplets by in-vitro fertilisation, set up Thomson Medical more than 30 years ago. It was then largely a maternity hospital but has since grown to include paediatric, fertility, cancer and aesthetics services, as well as traditional Chinese medicine. It also operates seven O&G clinics across the island.

Explaining the rationale for the move, Mr Lim said in a statement: ‘Thomson Medical is a leading healthcare service provider in Singapore for obstetrics, gynaecology and paediatric services. Given the growing population and affluence in the region, there will be increasing demand for private healthcare services.

‘Singapore is a regional hub for such services and Thomson Medical is well-placed to tap on this demand. We believe it has potential to develop further as a regional healthcare company.’

The cash offer is conditional on Sasteria acquiring more than 50 per cent of Thomson Medical.

BT understands that Thomson Medical had been approached by other suitors before, being one of a handful of private healthcare providers here. On Tuesday, the group had announced 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.

According to previous media reports, Mr Lim, 57, also owns a 29.6 per cent interest in Malaysia’s TMC Life Sciences, a healthcare services provider specialising in fertility treatment, stem cell banking and stem cell therapy.

The stake, which was bought in August for an undisclosed sum, makes him the second-largest shareholder in TMC Life Sciences. TMC Life Sciences also runs a 180-bed hospital in Petaling Jaya.

A few months ago, Mr Lim raised his stake in Healthway Medical Corp to over 7 per cent. Although he has since sold down that interest, he still owns about 4.8 per cent in the primary healthcare chain.

Mr Lim is ranked Singapore’s eighth richest man by Forbes Asia with a net worth of US$1.6 billion. Mr Lim, who made his fortune in the stock market, has varied investments in sectors such as agribusiness, education, fashion, logistics, and F&B. The publicly-known holdings in his portfolio include Wilmar International, Global Logistic Properties, FJ Benjamin Holdings and Informatics Education.

A few weeks ago, Mr Lim also made headlines by launching a £300 million (S$622 million) bid for Liverpool Football Club. Although that deal did not go through, the prospect of a Singaporean-owned English football club generated excitement among local fans.