Record FY17 for Singapore Medical Group with FY18 expected to be stronger

Record FY17 for Singapore Medical Group with FY18 expected to be stronger

Samantha Chiew
02/03/18, 12:06 pm

SINGAPORE (Mar 2): RHB is maintaining its “buy” call on Singapore Medical Group (SMG) with a target price of 68 cents, as the group’s turnaround is further validated by organic and inorganic growth.

This came on the back of the group announcing that its FY17 earnings surged 250.8% to a record $8.5 million from $2.42 million in FY16.

See: Singapore Medical Group FY17 earnings surge 250.8% to $8.5 mil on higher revenue

Revenue was 63.5% higher at $68.0 million from $41.6 million a year ago.

In a Friday report, analyst Jarick Seet says, “This was however short of consensus estimates but we understand it was mainly due to one-off renovation costs for its offices as well as some mergers and acquisitions (M&A) transaction costs.”

The group has decided to propose a renounceable non-underwritten rights issue of one right for every 20 existing shares at an issue price of 48 cents per share, raising up to $10.8 million.

This will further strengthen its balance sheet to support its high growth trajectory, led by organic and inorganic initiatives.

In addition, the group’s overseas expansion is gaining traction, while it remains bullish on Vietnam. A paediatrics leader has been hired to spearhead growth initiatives at its Vietnam Careplus clinics.

Meanwhile, the group’s eye clinic in Jakarta, which was loss making, is not showing signs of growth and profitability.

Currently, the group is interested to expand into new medical segments like cardiology, dental paediatrics and further expand into aesthetics.

Looking ahead, the group’s management is keen on higher margin medical segments to further boost its blended markings.

“We also expect it to also make more accretive but smaller sized acquisitions or JVs, especially in aesthetic segment in the near term, thereby hastening its growth." says Seet.

In fact, the group on Thursday evening announced that it has acquired an 85% stake in the SW1 Aesthetic Clinic.

See: Singapore Medical Group acquires 85% of SW1 Clinic for $6.5 mil

“We expect a stronger FY18, mainly due to the full earnings accretion from its Astra Women's Specialist group of clinics (Astra) and paediatric acquisitions,” says Seet.

As at 12.05pm, shares in Singapore Medical Group are trading at 56 cents or 21.5 times FY18 recurring earnings.

Jokowi declared winner a month after Indonesia presidential vote

(May 21): Indonesian President Joko Widodo won last month’s bitterly contested election by a double-digit margin, official results showed Tuesday, putting the former furniture exporter in charge of the world’s largest Muslim-majority nation for another five years. Widodo, known as Jokowi, won 55.5% of the national vote, compared to his challenger Prabowo Subianto’s 44.5%, the General Elections Commission said in Jakarta early on Tuesday. Jokowi’s margin of victory at 11% was almost double the lead he secured in 2014 against the same opponent, commission’s data showed. The tally al....

Sembcorp Industries' near-term outlook hinges on sustained India uptrend, say analysts

SINGAPORE (May 21): CGS-CIMB Research and DBS Vickers Securities are maintaining their “add” and “buy” calls on Sembcorp Industries (SCI) with target prices of $3.41 and $3.90, respectively. This comes after the group last week posted 21% higher 1Q earnings of $77 million on higher contributions from its energy segment, which was mainly driven by improved performance from India and the recognition of peak winter availability payments for UK Power Reserve. In a May 15 report, CGS-CIMB analyst Lim Siew Khee says she considers SCI cheap at $2.54, which is 0.6 times FY19 price-to-boo....

China warns about 'unwavering resolve' to fight 'US bullying'

BRUSSELS (May 21): China could retaliate against the US after President Donald Trump blacklisted Huawei Technologies Co., the Chinese ambassador to the European Union said. Trump upped the ante in his trade dispute with China last week, announcing moves to curb Huawei’s business that are starting to have ramifications for other companies around the world. "This is wrong behavior, so there will be a necessary response," Zhang Ming, China’s envoy to the EU, said in an interview in Brussels on Monday. "Chinese companies’ legitimate rights and interests are being undermined, so the Chi....