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ISEC Healthcare seeks regional growth in eyecare space

Samantha Chiew
Samantha Chiew • 7 min read
ISEC Healthcare seeks regional growth in eyecare space
ISEC Healthcare acquired Ipoh Eye Specialist Group, the largest private eyecare provider in Perak, Malaysia, in 2022. Photo: ISEC Healthcare
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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 “more sedentary and indoor lifestyles, less-nutritious foods and resulting obesity”, 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 40T -

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 S68 -

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. 

“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,” 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 — they can only deliver their individual professional services. 

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ISEC aims to solve that issue by creating a “centre of excellence” focusing on ophthalmology. By banding up together, Wong and the other doctors improved economies of scale, especially regarding equipment and machinery investment. “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,” 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.

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“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,” 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’s latest greenfield expansion was its 51%-owned ISEC eye specialist clinic in Kuching, Sarawak, which obtained the operating licence from Malaysia’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. “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,” notes ISEC’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.

“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,” says Wong, who expects this new space to start operating in about three years. 

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The newly acquired space will also be used as ISEC Healthcare’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’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’s Aier Eye Hospital Group, which is listed on the Shenzhen Stock Exchange.

“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’s largest provider of eyecare services and own hundreds of hospitals in China,” 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’s reputation, Wong says ISEC has received a “tremendous advantage in negotiating” for equipment and machinery pricing. Being the largest eye healthcare provider, Aier has also contributed, through its global experience, to support and improve ISEC’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’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 “buy” call and 44 cents target price on the stock.

Besides the attractive yield, they are upbeat about ISEC Healthcare’s prospects, especially in Malaysia, with the upcoming new space boosting its capacity to take more patients. “With increasing demand for ophthalmology services in the region, strategic plans to expand into existing and new markets and the group’s effort to enlarge their highly-specialised talent pool, positions it well for sustainable growth,” say Yap and Chan, who also see potential in the group’s expansion plans to emerging markets in the coming years.

Year to date, ISEC Healthcare shares have dropped 14.9% to change hands at 40 cents as at June 11, valuing the company at 17.95 times historical earnings and giving it a market value of $230.2 million. 


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