PhillipCapital has maintained its “buy” rating and target price of 26 cents on ClearBridge Health (CBH) on the back of a stronger 2H20 for the company. 

The Phillip Research Team said 1H20 revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) were within expectations with revenue coming in at $21.4 million and EBITDA at a positive $3.6 million. Operating cashflow also saw a reversal from negative$3.6million in 1H19 to $4.5 million in 1H20. 

They add CBH continues to expand and leverage its network of medical centres throughout ASEAN. The stronger operating cash-flow and balance sheet will allow CBH to further grow via acquisition and expand their Indonesian operations faster where the capital expenditure and working capital requirements are much higher.

The team noted growth in 1H20 was driven by the acquisition of nine Singapore dental clinics in August 2019, and distribution of Biolidics Covid-19 Antibody Test Kits.

They also add that the ability of CBH to widely and rapidly distribute the new test kit across their medical network in SE Asia was a positive surprise and represents a new growth opportunity for future products.

As such, the team expects a stronger recovery in 2H20 for CBH. Almost all business segments suffered lower patient load in 1H20 due to the lockdown. Only renal care operations in Indonesia fared better as the daily dialysis treatment is essential for patients. 

However, the team expects all divisions of CBH to experience stronger outlook in 2H20, as lockdowns across Asia ease. 

For Indonesia, they expect patient traffic in the hospitals to recover from a  “devastating” 2Q20, improving lab test activities for IGM Labs. TMJ revenue will remain stable and largely unaffected by the pandemic due to the need for patients to undergo daily hemodialysis treatment. With 23 facilities in operation and another 13 more pending permits or under renovation, growth will remain robust for TMJ.

Meanwhile, in Singapore, the team expects a recovery and pent-up demand as the lockdown eases. The dental business will benefit from having a larger presence in the heartlands, which provides greater convenience for patients. 

They also note the clinic in Hong Kong has also refocused its efforts on domestic patients and added another role as a gateway to source new products from China as patient load from the mainland was affected. 

As at 10.56am, shares of CBH were trading flat at 17 cents, with an FY20 price to book ratio of 1.8.