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Post Info TOPIC: Thomson Medical
KK


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Thomson Medical - CIMB
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12 Jun 07

Singapore Healthcare Sector

Marketing takeaways

Singapore healthcare theme well-received in Hong Kong. We marketed the Singapore healthcare sector in Hong Kong last Friday and met eight clients during the trip. Generally, clients agreed that the Singapore healthcare system is one of the most structured and soundest in Asia, given the various policies and instruments available to finance healthcare expenditure. The discussions centred on how healthcare providers here are benefiting from: 1) a greying population; 2) the tight supply of beds/facilities; 3) the implementation of means testing; 4) an immigration boom; and 5) medical tourism.

Investors will eyeball implications of means testing. We explained the move by the Ministry of Health to implement means testing by year-end to investors. Most clients were interested in our theory that private healthcare providers will benefit from the spillover of patient load from the subsidised public sector with means testing.

Positive dynamics for healthcare operators. Clients were also impressed by the speed and magnitude by which Singapore has been capturing medical tourists. We took the opportunity to explain how private hospitals, facing high occupancy rates, have taken measures to decant space and transformed that space into beds/wards, medical suites and earnings-related capacity to raise the ceiling for growth. Apart from Singapore, these private healthcare operators have also leveraged their success to scale up operations overseas.

Valuation and upside were the main deterrents. We sensed that perceived premium valuations and limited upside as the only deterrents for investors. But we contended that earnings surprises and catalysts could manifest in the next 6-18 months, which are not entirely captured in our current forecasts.

Earnings could outpace valuations soon. Parkway was the only company that was well understood, but clients were quite put off by its valuation despite its strong franchise and overseas expansion. We feel that the acceleration of China gestation could surprise on the upside. Investors who own Raffles Medical could expect another record quarter by the group, a consistent performer. We told investors that the only risk would actually come from the cost side. Thomson Medical generated the most interest, but the main grouse was the small size of its market cap. We suggested to clients that the group could continue to double its market cap with the work it is doing regionally, with Malaysia and Indonesia being its next geographical outings.

We maintain our Overweight position. Singapore healthcare service providers trade at an average 20.5x CY08 P/E, with a 3-year revenue CAGR of 28%. Forward ROE of 24.6%, coupled with 2.7% dividend yields, lends stability to the sector outlook. We expect the healthcare sector to deliver total returns that can outperform the STI for 2008. As such, we maintain our sector Overweight.

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Thomson Medical - Phillip
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12-Apr-2007

Owning A Slice Of Life

Bumper dividend on steady revenue growth. H1 FY07 revenue rose 8% yoy to S$24.3m on the back of growth in both its Hospital Operations & Ancillary services (+6% yoy) and Specialised & Other services (+15% yoy). H1 net profit of S$4.4m (+35% yoy) was mainly driven by revenue growth, gain from the sale of associated company and higher other income.

To reward its shareholders for their continued support, the Group has declared an interim dividend of 0.75 cents per share ("cps") and a special dividend of 0.75cps. With an estimated FY07 dividend of 1.5cps and a potential special dividend in H2 of 0.75cps, based on 50% unutilised S44A tax credits, the FY07 yield is about 5%.

Renovation work completed in H1 and full contribution expected in H2. The renovation work on Level 4 and 6 wards were completed by Feb 07. Despite the closure of the wards, the Group achieved growth in the top-line in H1. However, management estimated the impact was revenue loss of about S$1.8m for the 58 beds. We were assured that full contribution from both wards will be made in H2 FY07.

Breaking ground in Vietnams healthcare sector. The Groups maiden project in Vietnam is progressing well tender award is expected in May 07 and it has secured two more hospital projects also located in Vietnam. The Group will provide consultancy services in exchange for fees, which will be paid in stages as the project progresses. Upon completion of the first project, the Group will manage the hospital for up to five years with an option to buy an equity stake in the hospital. Vietnam has a population of about 85 million people and a birth rate of 1.5% p.a., which represents 1.3 million newborn babies per year.

BUY with fair value of S$0.72. Our fair value of S$0.72 (pegged at 24x P/E) with FY07 EPS implies a forward P/B of 2.5x. We forecast a 2-yr CAGR of 15% for net profit to FY08, which is conservative and below concensus CAGR of 24%. We note that SGX-listed Parkway Holdings Ltd and Raffles Medical Group Ltds share prices are trading significantly higher at a P/E of 52x and 35x, respectively. Re-iterate BUY.

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Thomson Medical - CIMB
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12-Apr-2007

Many pleasant surprises

Strong results in line with expectations. Strong 1H07 net profits of S$4.4m (+35% yoy) were in line with our forecast though above Street estimates. Margins were record high, with EBIT and pretax margins coming in at all-time highs of 22.5% and 21.6% respectively. A surge in inpatient admissions, stable average length of stay and a lower effective tax were behind the net margin expansion to 18.3% (from 14.6% in 1H06), despite higher expenses. A generous dividend payout of 99% was a pleasant surprise.

Upside surprises from management fees? Piling work for the managed hospital in Vietnam is on schedule. With building tenders expected to be awarded in mid-2007, TMC will be able to recognise consultancy fees as the project progresses. Since part of the fee earned is pegged to construction costs, we think that upside surprises could come from higher fees accrued to TMC, as construction costs have risen by 15% yoy.

Enhanced facilities within hospitals are earnings-accretive. With space rationalisation and renovation work completed for two wards in Singapore, operational beds in FY07 could increase to 150 from 130. Coupled with an average 3% rate hike for bed charges, EBIT margins could improve to 21.4% in FY07 from 20.1% in FY06.

Raised estimates and target price to S$0.73. We have raised our FY07-09 earnings estimates by 3.2-8% to reflect stronger contributions from the hospital segment. Our target price has been lifted to S$0.73 from S$0.58, upon rolling forward our unchanged 17.5x P/E target to CY08 and after our earnings upgrade. Potential catalysts include capacity expansion, increased admissions and more rate hikes. Reiterate Outperform.

-- Edited by KK at 10:33, 2007-04-12

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Thomson Medical - BT
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Published April 11, 2007

Thomson Medical half-year earnings rise 34.8%

Group proposes special dividend to pass on Section 44 tax credits

THOMSON Medical Centre has reported a 34.8 per cent year-on-year rise in net profits to $4.4 million for the half-year ended Feb 28. Revenue rose 7.8 per cent to $24.3 million, and earnings per share was 1.52 cents - up from 1.13 cents.

The group declared an interim dividend and a special dividend of 0.75 cents each per share, both net of tax. The special dividend was proposed in order to pass on its Section 44 tax credits to shareholders.

In a statement, Thomson said that revenue from hospital operations and ancillary services went up 6.2 per cent to $19.6 million, as the hospital continues to see an increase in patient referrals from its tenant specialists, peripheral specialists and its network of Thomson Women's clinics.

Also, there was an increased number of deliveries and inpatient admission compared with a year-ago period, and the rise in patient load saw corresponding growth in diagnostic and ancillary services.

Revenues from specialised and other services increased 15.1 per cent to $4.7 million, owing to contributions from Thomson Women's clinics and Thomson International Health Services.

All the Thomson Women's clinics contributed positively to the earnings. The group's hospital consultancy project in Vietnam is progressing well.

The piling work for the 260-bed Hanh Phuc International Women and Children Hospital is expected to be completed on schedule in April 2007. The main building tender for the project has been called and is expected to be awarded in May 2007. The group will recognise its consultancy fees as the project progresses.

The group will continue to seek opportunities to expand its network of Thomson Women's clinics in Singapore to further increase market share and enhance the positive contribution to the hospital.

It will also intensify its marketing activities and strategic collaboration with regional doctors and partners to increase patient referral to the group. Thomson said the group will be exploring healthcare opportunities in Malaysia and Indonesia.


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Thomson Medical
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BT, Published April 2, 2007

Thomson Medical eyeing M'sia, Indon hospitals

THOMSON Medical Centre, which runs Singapore's only private hospital for women and children, hopes to expand into Malaysia and Indonesia through joint ventures, its chief executive said.

Thomson plans to capitalise on South-east Asia's dearth of obstetric and gynaecology facilities and on its expertise in hospital management. The firm is currently building a hospital with Vietnam's state-owned Protrade Corporation in the country's Binh Duong province. Two more are planned.

'To look beyond is something we have to do, we cannot just stay in Singapore,' Thomson's chief executive officer Allan Yeo told Reuters.

Singapore-listed medical firms such as Parkway Holdings and Raffles Medical Group have found it necessary to expand regionally, as growth is limited in the island of 4.5 million people.

Mr Yeo said Thomson is in talks with 'a few' private firms in Indonesia and Malaysia, adding that discussions are still 'in a very early stage', but declined to be more specific. - Reuters

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Singapore's birth trend outlook remains dismal: sociologist

SINGAPORE: About 600 more babies were born last year. Preliminary birth figures from the birth registry at Immigration and Checkpoints Authority put the number of babies born in 2006 at 38,232. But a sociologist said the marginal increase in newborns would do little to lift Singapore's total fertility rate from its record low of 1.24 in 2004.

Besides aggressive immigration policies, bolder changes in family policies are needed to help Singapore replace its rapidly ageing and dwindling population.

Even with 600 more babies born in 2006 than the previous year, Singapore's total fertility rate, which has hovered around the all-time low of 1.24 for the last two years, is likely to remain one of the world's lowest. The Total Fertility Rate is the lowest among Singapore Chinese women, just 1.08 babies per resident female in 2005.

To grow the Singapore population, the government ramped up its foreign talent programme last year to encourage talented people to migrate to Singapore. Dr Angelique Chan, Sociologist, National University of Singapore, said: "I think dual citizenship is something we should consider in the Singapore context, particularly if we're interested in maintaining the numbers in the Singapore population." But she added that immigration is only a short-term solution. And in the long run, Singapore needs to look at policies that enable families to grow and policies which help families to better balance work with family life.

Countries like France have shown that family-friendly policies like a 40-week paid maternity leave for the third child, cheap childcare and free nurseries go a long way in reversing falling birth rates. On top of free public transport, grants, allowances and tax breaks – which increase substantially after the third child – the French government recently raised its special allowance to pay mothers 1,000 euros a month if they give up work that year to have their third child. French women now have an average of two children each, compared with the European average of 1.5.

Since its introduction in 2001 and enhancement in 2004, Singapore's Baby Bonus scheme has had very modest success. "I think Singapore has reached a point where it has a lot of economic success and now it has some surplus, and it's time to start thinking about the more human element," said Dr Chan.

So will the Year of the Pig bring on fatter Baby Bonuses? Singapore couples will not have to wait long to find out as Budget Day, February 15, approaches. - CNA/so


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Fm SGX Announcement dated 28- Dec-06,


Thomson Medical Centre Limited ("Company") wishes to give notice of the books closure date for the Bonus Issue and the final dividend of 0.7755 cents per ordinary share (net of tax) and a special dividend of 0.45 cents per ordinary share (net of tax) for the financial year ended 31 August 2006 (the "Dividend").

Unless otherwise defined, all terms used herein bear the same meaning as in the announcements dated 30 October 2006 and 24 November 2006.

NOTICE IS HEREBY GIVEN that, the Register of Members and the Transfer Books of the Company will be closed at 5.00 p.m. on 16 January 2007 ("Books Closure Date") up to and including 18 January 2007 to determine shareholders' entitlements to the Bonus Shares under the Bonus Issue, and to the Dividend.

Duly completed registrable transfers received by the Company's Share Registrar, Kon Choon Kooi Pte Ltd at 47 Hill Street, #06-02 Singapore Chinese Chamber of Commerce & Industry Building, Singapore 179365 up to 5.00 p.m. on the Books Closure Date will be registered to determine shareholders' entitlements under the Bonus Issue and Dividend. Shareholders whose Securities Accounts with The Central Depository (Pte) Limited are credited with ordinary shares as at the Books Closure Date will be entitled to the Bonus Shares and the Dividend.

The payment date for the Dividend will be 30 January 2007.

The Company will be releasing an announcement to advise on the date of listing of and quotation of the Bonus Shares in due course.


BY ORDER OF THE BOARD


Dr. Cheng Wei Chen
Executive Chairman

28 December 2006



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Thomson Medical - CIMB
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Extracts fm CIMB report dated 11-Dec-06,

New frontier awaits

• Not one but three Vietnam projects. TMC’s project in Vietnam originally involved one women & children’s hospital (Hanh Phuc Hospital). The company recently announced exclusive management contracts for two more greenfield women & children’s hospitals within the next 18-36 months. Earnings could be lifted by 4-10% over FY08-09, should we assume the same progressive fee income as the Hanh Phuc Hospital. We have not imputed these potential contributions in our forecasts.

• Enough room to grow in Singapore. The Singapore government’s recent decision to remove subsidised healthcare services for permanent residents and foreigners could lead to an outflow of patients from public hospitals to private hospitals. As a private healthcare provider, TMC has the potential to capture any spillover in patient load.

• No need to monetise assets to drive growth in Singapore. We are comforted by TMC’s decision not to divest its hospital building to a Reit. This should allay fears of escalating rentals, which could chase away practising specialists.

• Managing capacity to deliver earnings growth. TMC recently renovated its hospital to convert previously “wasted space” into operational work areas and more luxury rooms for patients. Future growth will hinge on rate hikes, increased occupancy rates and higher utilisation of higher-margin facilities.

• Maintain Outperform with unchanged target price of S$0.58, based on 18.5x CY07 P/E. We see good prospects for TMC to capture overseas dollars in Vietnam, without M&A cash outflows. The group continues to take market share in the Singapore O&G market. Reiterate Outperform.



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Thomson Medical - Phillip
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Extracts fm Phillip report dated 1-Nov-06,

The Group delivered an impressive set of FY06 results that were above consensus and our expectation. Net profit after tax grew 27% yoy to S$6.8m underpinned by double digit revenue growth for the third consecutive year. Given the continued strong operating cash flow, the board has recommended a final dividend of 0.7755 cents per share. Inclusive of the interim dividend of 0.5 cents, payout ratio is about 50% of its earnings, similar to that of last year. The icing on the cake is the proposed special dividend of 0.45 cents per share and bonus issue (1 for every 10 existing shares held).

Across-the-board improvement. The Group’s Hospital Operations & Ancillary Services segment rose 10.3% yoy to S$37.9m in FY06 on the back of increased patient load with the addition of 5 new O&G specialists who joined in 2H05. Notably, TMC saw a 16% increase in number of deliveries, way above the national average as it continued to gain market share from other operators. The Specialised & Other Services segment, which contributed about 18.6% of total turnover, has achieved topline growth of 26.3% from S$6.9m in FY05 to S$8.7m. This is mainly due to increased profitability of all its 7 Women’s clinics in Singapore.

Putting the pieces in place. The upgrading of its Thomson Diagnostic Imaging Centre has been completed and we believe this would lead to greater utilization of its services. Not resting on its laurels, TMC has recently commenced the physical renovation of its inpatient wards to target those patients seeking premium clinical care, as understandably this market segment also tends to display less price elasticity. Moreover, we are comforted by the fact that the Group is taking active measures to address potential capacity constraints through further space rationalization and higher patients turnover.

Valuation not excessive. We are tweaking our FY07 and FY08 earnings forecasts upwards by 7.4% and 8.0% respectively. Although the share price has risen 96% YTD and 21% since our previous buy call in September, we still think that it has room for further upside. Our DCF model suggests a fair value of S$0.51. Besides, investors can look forward to a decent yield of 3.6% as the Group has adopted a formal dividend policy payout ratio of at least 50% of net profit. Maintain BUY.



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Thomson Medical - CIMB
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Extracts fm CIMB report dated 1-Nov-06,

Clear dividend policy and rate hikes pave way for re-rating


  • Strong results in line with expectations. FY06 net profit of S$6.8m (+27% yoy) came in 2% above our forecast and 10% above consensus. FY06 sales jumped 28% yoy to S$47m, driven mainly by strong revenue growth in hospital operations (+10% yoy) and Specialised Services (+26% yoy). Revenue from hospital operations and ancillary services rose to S$38m on the back of more in-patient admissions in the O&G and pediatric divisions that witnessed a record number of deliveries (over 7k babies).
  • Margins hit record high. EBIT and pretax margins came in at an all time high of 20.1% and 18.7% respectively in FY06 (vs 18.9% and 15.9% respectively in FY05). Feb06 3% bed rate hike led to a 10% yoy jump in revenue per bed for FY06. Coupled with a 9% surge in in-patient admission and a reduced average length of stay (ALOS), margins expanded despite higher staff cost and overheads.
  • Supported by positive operating cash flow and strong dividend yield. TMC moves into a net cash position in FY06 as improved cash conversion cycle offset higher capex from hospital renovation. Management also indicated a clear dividend policy of making at least 50% payout going forward. Dividend policy paves the way for stronger yield as the group declared a final dividend of 0.7755 Scts and a special dividend of 0.45 Scts, as well as proposing a 1 for 10 bonus issue, bringing payout to 67% of FY06 earnings.
  • Room to hike rates. The group is ready to roll out enhanced facilities within its hospitals in FY07. With space rationalisation exercise and renovation work completed, overheads are kept in check. An additional 10 beds roll out in FY07 (140 operational beds in FY06), coupled with a possible estimated average 3% rate hike on bed charges, leads us to expect EBIT margin improvement to 21.3% in FY07. Without the bed rate hike, the hospital segment (running at full occupancy during periods of high birth rates) will still attain 13% yoy revenue growth for FY07 due to higher margins for delivery wards.
  • Raised earnings estimates by 8-12% for FY07-08 and target price to S$0.58. We raise earnings estimates by 11.7% and 8.2% for FY07 and FY08 respectively to reflect stronger contribution from the hospital segment, on the back of rate hike and margin expansion. Our target price is raised to S$0.58 (from S$0.485) upon rolling forward to CY07 (still pegged at 17.5x P/E). TMC impressively resisted cost pressures and delivered improved margins in all operational segments. Immediate catalysts include capacity expansion, increased admissions and more rate hikes. Decent dividend yield expectation is supported by clear dividend policy. We introduce FY09 estimates. Maintain Outperform.


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Thomson Medical - UOBKayHian
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Extracts fm UOB Kay Hian Report dated 11-Oct-06,

We came back from a visit to Thomson Medical, feeling confident that they will continue to deliver consistent and steady earnings growth for the coming few years.

Background

Thomson Medical was listed on SGX SESDAQ in January 2005 and its activities include hospital operations & ancillary services and specialized & other services. Its hospital operations have a focus on O&G and pediatric services whereas its specialized services include Thomson Fertility Centre and Thomson Women’s clinic. Thomson’s main assets include its hospital on Thomson road and its six women’s clinic across Singapore. The Group rents out medical suites within Thomson Medical Centre where its tenants are mostly O&G specialists as well as pediatricians, plastic surgeons and dental surgeons. In return it collects a hospital facility fee. Thomson positions itself as a specialized private clinic for women and children and as can be seen from the table below it occupies the lower end of private clinic delivery services in terms of pricing. Part of its marketing strategy includes advertisements of local stars delivering at its clinic and reliance on word of mouth for excellent patient care service.

Management has indicated that they are confident that Thomson will continue to deliver good results for its shareholders. Moreover, they pointed out that they have managed to improve operational efficiency and thereby their bottom line.

Key Highlights


• Increase in market share
The Group’s market share for deliveries has increased from 17.6% in 2005 to 18.9% for 1Q06. This is laudable given the fact that the number of births in Singapore has not improved significantly even with the recent pro-family government incentives. From Jan-Mar 05 the number of deliveries was 8,644 and has since increased by only 4% to 9,051 for Jan-Mar 06. Looking ahead, Thomson will have to fight for larger market share in order to grow amidst competition and capacity constraint. Thomson Medical centre has 90 beds available and management has indicated that it will shift out its administrative office from its clinic to provide more space for new beds.

• Improved patient turnaround
A recent increase in prices, improvement in operational efficiency and medical technology has reduced patient turnaround and increased revenue per delivery and profit per delivery.

Prospects

Thomson alongside CPG consultants and DLS have recently (March 06) secured a contract to provide hospital planning and design brief, design development and project management for a private premium women and children healthcare facility to be set up in Vietnam. The project will start in Nov 06. Thomson, relying on its profound experience in women’s clinics, will be providing consultancy services for the design and operations management of the new 250-bed clinic. Thomson is expected to earn around 1-3% of the total construction costs (around US$20-40m) which will be spread over 2.5 years with an option to acquire some equity at the end of the project.

Valuation

The following table shows consensus valuation for Thomson vis a vis its peers.

Technicals

Thomson Medical.- Stock has been trending up since April 2005. It had reached a new 52-week high at $0.435, following a breakout of a lengthy triangular consolidation. The triangle breakout targets a price objective of $0.46-0.47. Given that the breakout was not accompanied by significant increase in volume, it is unlikely that the stock could move beyond the $0.46-0.47 level in the near term. Support remains at the apex of the triangular structure near $0.37.



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Thomson Medical - Phillip
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Extracts fm Phillip Report dated 8-Sep-06,

Thomson Medical Centre Ltd (the "Company") announced that it had entered into a sale and purchase agreement with China Healthcare Ltd ("CHL") to sell its entire stake in West Point for S$950,000, comprising 2m shares representing 50.89% of the issued share capital. Upon completion of the deal on 8 September 2006, CHL will hold 100% of WPFH.

How it came about. West Point Family Hospital was established in October 1996 as a 58-bed acute care hospital to provide family medical services specialising in O&G services. In June 2000, it was reclassified as a step-down care hospital providing a wide range of facilities including occupational therapy and physiotherapy, in addition to outpatient services. The Company approached Econ Healthcare Ltd (subsequently changed to CHL) in 2003 to invest in Westpoint as it feels that Econ has the relevant expertise and experience of running such a hospital. Although Thomson Medical continues to retain 51% of the equity interest, it has treated Westpoint as an associate in its financial statements given that CHL has the contractual right to appoint a majority of the directors on the board of Westpoint, as well as the right to manage its day-to-day operations.

The sale is long overdue. We view the share disposal as positive because it allows the Company to focus back on its core businesses and competencies in the provision of healthcare services for women and children. WPFH has never been a successful venture right from the start and in its recent set of results, Westpoint reported an operating loss of S$0.5m, due mainly to decreased availability of beds during the 5 month renovation period. As such, we believe that the freed up resources can be better spent on other uses like upgrading of Thomson hospital facitlites/ equipment or further expand its network of Women’s clinic in Singapore. Note that an one-time gain of approximately S$621,269 will be book in FY07.

Undemanding valuation. We have tweaked our earnings forecasts to take into account the latest transaction. The stock is currently trading at 15.6x and 13.3x FY06 and FY07 normalized EPS respectively, still at a discount compared to its peers’ average of 20x. Prospective yield of 3.4% may provide some cushion to the share price. Maintain Buy recommendation with no material changes to our DCF price target of S$0.46.



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Thomson Medical
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SGX Announcement,

Disposal of shares in West Point Family Hospital,
- Net Profit = $621,269
- NTA +0.14ct
- EPS +0.16ct

Very minimal financial impact and won't be reflected in the recently concluded yr end :D

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Thomson Medical - Phillip
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Extracts fm Phillip Report dated 24-Apr-06,

The Group’s 1H06 results came in above our expectations. Net profit increased by 17.8% to $3.3m at half time on revenue of $22.4m. However, after making adjustment to the tax charge in 1H05 (which was lower due mainly to reversal of overprovision of taxation of $0.3m in prior year), we believe a more correct comparison of its YoY growth should be around 32%. The Group has declared an interim net dividend of 0.5 cents, representing a 40% payout ratio.

Broad-based revenue growth. Turnover from hospital operations rose to $18.4m (+14.3% yoy) in 1H06 underpinned by a 21% increase in number of deliveries over the previous year. Revenue from specialised and other services grew at a stronger 37.9% from $2.9m to to $4m. All Thomson Women’s clinics improved on their performance with the new clinics at Serangoon Garden and Bukit Batok achieving breakeven and are expected to start contibuting postively to the Group’s bottomline. Its Fertilty Centre also recorded higher revenue from increased treatment cycles.

Positive outlook. Armed with a strong brand name, Thomson has clearly demonstrated its abilty to attract private specialists under its wing. Moving forward, we believe these group of new specialists will contribute to greater utilisation of hospital’s facilities and services. In view of the stronger than expected first half performance, we have adjusted upwards our full year forecasts by 9.7% accordingly. We understand that the Group has commerced billing for work done on its regional hospital consultancy project in Vietnam.

Remain a long-term buy. We like Thomson for two reasons; 1) its niche position in the healthcare services as evidenced by continuing market share gain and 2) it is a cash generative business. For the last 3 financial years, operational cashflow had been robust, easily more than matching its net earnings. As mentioned in our previous note, we believe there is room for higher dividend payout given the not so demanding capex requirement in the long run. The stock is currently trading at 17x and 15x FY06 and FY07 P/E respectively; still at a discount compared to it peers. Decent yield of 3.2% should provide some support to the share price. Our target price is S$0.46, based on DCF valuation. Accumulate on any price weakness.



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Thomson Medical - CIMB
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Extracts fm CIMB Report dated 13-Apr-06,

Smooth Delivery 


  • 1H06 was 7% above our forecast and 14% above consensus expectations. Net profit came in at S$3.3m (+18% yoy) in IH06 attributable to the strong increase in the revenue generated from all business segments and lower financing cost, despite share of associate loss, and higher taxes compared to 1H05 which was lower due mainly to a reversal of over-provision of taxation of S$0.3m. 
  • Margins improvement. Margins have shown improvement despite higher staff cost and closure of some facilities due to the ongoing construction and upgrading works within the hospital. Renovation work has not affected operational flows and we do not expect any significant downtime arising from this work. The group’s EBIT and pretax margins came in at an all time high of 20.5% and 18.4% respectively in 1H06. 
  • The new Thomson Women’s Clinics at Serangoon Garden and Bukit Batok broke even and expected to contribute to the group’s earnings going forward. Upgrading work once completed, can free up existing capacity and innovative use of space can add hospital wards and specialist services that cater to more patient admissions. Work on Thomson Medical’s regional hospital consultancy project is also on track. 
  • Dividend payout should improve further. The group has declared an interim dividend of 0.5cts representing a 40% payout ratio. Going forward, we expe cta higher payout ratio supported by stronger earnings given that the group has a non-demanding capital expenditure programme. 
  • Price target upgraded to S$0.485. Earnings estimates upgraded by 8.4% for FY06 to reflect the stronger contribution from the Specialised and other services business segment. Maintain Outperform with a upgraded price target of S$0.485 (from S$0.45), based on 17.5x CY06 P/E (previously 16x) against sector average of 22.5X as we believe that TMC has shown its resilience against cost pressure, and delivered improved margins in all segment of its operations, and deserve to trade at a higher P/E multiples.


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Thomson Medical - 1H06 Results
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Extracts fm SGX,


  • Revenue = $22.437M (+17.8%)
  • Net Profit = $3.288M (+17.8%)
  • EPS = 1.24cts (+18.1%)
  • NAV = 26.8cts (+7%)
  • Interim Div = 0.5ct

Looks good but share price hv also gone up a lot recently.



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Thomson Medical - CIMB
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Extracts fm CIMB Report dated 23-Mar-06, 

Moms n’ babies value chain

TMC is the only private women and children’s hospital in Singapore. It continues to garner market share despite the Republic’s declining birth rate. We believe it can continue to boost its high occupancy rates through innovative configurations of its existing and "hidden" space. 


  • Extracting value from the "moms n’ babies" value chain. TMC has effectively created a "moms n’ babies" value chain by offering strong pre- and post-natal medical services that most competitors cannot match in Singapore. Research and pioneering efforts in IVF have, moreover, given TMC international recognition, attracting foreign patients. 
  • Capturing overseas dollars. TMC has secured a management consultancy service contract for a private women and children’s hospital in Vietnam, guaranteeing an attractive revenue stream without M&A cash outflows. 
  • In the pink of health. TMC’s FY06 earnings are expected to grow 15.1% yoy. FY05 payout was 55%. We believe the ratio can increase going forward, offering prospective yields of 4.4-6.7% for FY06-08. 
  • Target price of S$0.45. TMC trades at 11.7x CY06 P/E, significantly below the 19.0x for peers and our net earnings CAGR forecast of 21.1% for FY05-08. We rate TMC an Outperform with a price target of S$0.45, based on 16.0x CY06 P/E. Our P/E target represents a 16% discount to average valuations for peers to factor in its smaller size and single-focus business. Immediate catalysts could include capacity expansion to cater to increased admissions and bed rate hikes.


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Thomson Medical
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SINGAPORE (XFN-ASIA) - Specialist obstetrics and gynaecology healthcare provider Thomson Medical Centre said it will continue to seek overseas ventures in a bid to expand its business amid an increasingly competitive private healthcare sector here. "Having 26 years of very successful operations and being considered as a "branded" hospital, we feel the need for Thomson to also go regional," Thomson Medical group chief executive Allan Yeo told XFN-Asia in an interview.

The company reported last month that net profit in the past year to August rose 35.5 pct year-on-year to 5.3 mln sgd, while sales rose 13.2 pct year-on-year to 41.2 mln.

However, analysts say that given the saturated and competitive local healthcare sector, Thomson is unlikely to maintain its market share as well as growing its earnings strongly. "Organic growth locally looks limited and catalysts are more likely to come from overseas ventures," SIAS Research analyst Howard Lim said in a note.

Thomson recently announced that its wholly-owned unit Thomson International Health Services Pte Ltd has been appointed by Protrade Corp to be a consultant for the development of a private hospital for women and children in Vietnam. This deal is expected to provide Thomson with a recurring income stream when construction of the hospital is completed in 2008, Yeo said. Looking ahead, Yeo said that the group will continue to work towards securing more healthcare consultancy projects in the region, adding that Thomson may look at expanding into Indonesia and Malaysia initially.

Birth rates in the city-state have been dropping for decades and last year, it slumped to 1.24 per woman, well below the natural replacement rate of 2.1. However, Yeo said that despite the low birth rates, he is confident that Thomson will maintain its strong growth by gaining market share. "We feel we can sustain the growth and we feel that the future is good," Yeo said.

"If you look at the first three months of our [current] financial year, we are seeing an increase in deliveries of babies. Our deliveries are more than 600 a month, compared to previous months' of over 500," he said. Doctors at Thomson delivered 5,400 babies last year and he expects deliveries to hit 6,185 by the end of this year, according to Yeo. He said that he is also confident that the birth rates here will increase. "I think the government will put in efforts to increase the birth rates," he said, noting that the local government has already announced last August a 300 mln sgd pro-family package.

Yeo also pointed out that there has also been a rising trend of people seeking private healthcare over public hospitals. "For example, when doctors from (government hospital KK Women's and Children's Hospital) move here, their patients follow, Yeo said.

Thomson, which currently has obstetrics and gynaecology clinics sprinkled in various neighbourhoods around the city-state, plans open another 2-3 clinics by the end of August next year, Yeo said.


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Permalink  

Hv added in FY05 Results in StockPick blog

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Thomson Medical - Philips
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Extracts fm Philips Report dated 31-Oct-05,

Above expectations

Thomson Medical Centre (TMC) reported a commendable set of full year results that beat consensus and our own estimate. Revenue and net profit increased by 13.2% and 35.5% to S$41.2m and S$5.3m respectively. As expected, the Group declared a dividend of 1.0 cent per ordinary share, translating into 46% payout ratio. Based on current market price, this works out to a net yield of about 4.44%.

Robust 2H05 results. TMC’s earnings of S$2.54m in the second half were much stronger than our original projection. We attributed the variance to 1) solid perforrmance displayed by its two business segments, underpinned by increased in inpatient admission numbers and greater contribution from Thomson women’s clinics and Fertility Centre, 2) expansion in gross margin (1.3% point better than our assumption) as a result of improved labour efficiency coupled with tight control over direct materials costs.

Moderate Outlook. Going forward, we do not foresee TMC to maintain this kind of organic growth especially as the local market becomes saturated and protecting its market share in the face of keen competition may prove to be a formidable task. Any catalyst is likely come from its healthcare consultancy projects in the region, in our opinion.

Valuation. Operating cashflow rose from S$6.7m to S$9.6m in FY2005, more than offsetting the S$1.5m capex for the year. Furthermore, gearing ratio was reduced to 0.16 from 0.60 due to repayment of S$18.5m in bank loans from IPO proceeds and also from surplus operational funds. We think that the Group holds more than sufficent cash for its own needs (TMC is sitting on close to S$11m of cash). Hence, we believe there is still room for higher payouts in the future as the Group returns surplus cash to shareholders.

We have raised our profit estimate for next year by 17% to reflect the better than expected FY05 results, Using the same valuation methodology, our 1-year price target is raised to S$0.27, or 12.7x FY06 P/E, which is not demanding at all if compared to its peers. We thus upgrade our rating to Buy, offering about 20% upside.



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Thomson Medical
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KK wrote:

My prediction for FY05 Results EPS = 2.8cts to 3.2cts NAV = $0.28 Dividend = $0.005 to $0.007 (Edited - Missed out one '0')-- Edited by KK at 23:15, 2005-10-26

Results are out,


  • EPS = 2.24cts (below my forecast)
  • NAV = $0.2656 (below my forecast)
  • Div = $0.01 (better than my forecast)

Links : Press Release / Results



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Thomson Medical - Philips
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Extracts fm Philips Report dated 27-Oct-05,

Thomson Medical Centre (TMC) has been appointed by Protrade Corporation as the hospital consultant for the development of a private hospital for women and children in Vietnam. This agreement marks the first major regional foray by the company into fee-based healthcare consultancy services. The provision of such services offer significant follow-on prospects after the completion of the project.

Building the external wing. Thomson International, a wholly-owned subsidiary of TMC, had earlier entered into a MOU and an Agreement to establish Business Plan (which is completed in Sept 05) with Protrade. We also understand that Thomson may be granted an option to subscribe for shares in a corporate entity to be set up by both sides. We believe the management will continue to explore opportunities such as hospital management services as well as seeking out strategic overseas partnerships in an effort to increase its presence at key catchment areas for foreign patients.

Capturing market share against the backdrop of low national birth rate. On another announcement released recently, TMC revealed that it had registered a 24% jump in the number of deliveries for the period January to September this year as compared to the the same period last year. Moreover, the company has seen a sharp increase of 34% in the number of births between May and July, way above the national figure of 3%. One of the main reasons cited was the addition of six new O&G specialists who have set up their clinic practice in the hospital. We viewed the news positively as future growth would more likely depend on market share gains rather than industry growth.

Valuation & recommendation. While the hospital consultancy services are expected to be earnings accretive to the Group from FY2006 onwards, we are leaving our profit estimates intact for the moment. We will update our forecasts accordingly after the release of full year results on this Thursday after market close. In the meantime, we maintain our Hold rating with fair value of S$0.245, based on DCF valuation. Recommend accumulating the stock at 21 cents for >15% upside.



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Thomson Medical - SIAS
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Extracts fm SIAS Report dated 21-Oct-05,

Update


  • Developments aimed at solidifying position as leading O&G (Obstetrics & Gynecology) services provider : Thomson released a series of announcements that showed that the company remained in pole position when it came to O&G services.
  • Singapore Promising Brand Award : The Company announced that it has been awarded the Singapore Promising Brand Award for the second year running. This showed the continued success of Thomson’s brand development and recognition that the public has given to Thomson in regards to quality and trust.
  • Incorporation of Aesthetics services : Thomson also incorporated a 51% subsidiary, Thomson Aesthetics Centre, to provide medical aesthetics services to its clients.
  • Increase in number of deliveries : Thomson also announced that in the period between January and September this year, the hospital delivered 24% more babies than the same period last year. This was especially significant considering that in the period of May to July, the nation only saw a 3% increase in number of births while Thomson saw a 34% increase in the same period.
  • Main contributors from new specialists : The management cited the increase in deliveries could be due in part to the six new O&G specialists who have set up their practices in the hospital. Referrals from Thomson Women’s Clinics were also a factor.

Outlook


  • Increase in deliveries : Being one of the leading O&G providers, the large increase in deliveries could well mean that Thomson is slowly gaining market share and prominence at the expense of local competitors. This should contribute to boosting the company’s long term bottom line results.
  • Moving forward : Thomson has already established itself as one of the leaders in O&G services. What is next should be more important now than ever. A joint venture or acquisition of more services should serve to boost the revenue streams of the company as well as improve the bottom line.

Risks


  • Outbreaks: As previous outbreaks have proven, the Singapore healthcare industry is as vulnerable as other industries to major disease outbreaks. The danger of SARS or Bird Flu outbreaks is still present. Foreigner could avoid coming to Singapore for medical procedures and treatments. Furthermore, in the event that an outbreak does happen, and an employee or patient is infected, the hospital may have to temporarily shut down until the spread of disease is contained. This would most probably create long-term negative impact.

Valuation/Recommendation


  • Maintain Buy : We are reiterating our BUY rating on TMC with the target price of S$0.23 based on our DCF valuations. We expect earnings this year to improve compared to FY04, and should be updating our valuation after further guidance from management at the next results announcement.


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Thomson Medical - Philips
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Extracts fm Philips Report dated 10-Oct-05,


Thomson Medical Centre (TMC) announced that it has been awarded the Singapore Promising Brand Award 2005. This is the second year running that the company was being recognised by the industry players, which in our opinion, is a strong endorsement of its brand quality.

Singapore birth rate hits record low in 2004. Notwithstanding the positive news above, there lies a worrying predicament. According to the latest figures released from Statistics Department, it reported that the total fertility rate (TFR) dropped from 1.25 in 2003 to 1.24 birth per resident woman, way below the replacement rate of 2.1. But things may be looking up; as we believe the government's pro-family package announced in August 2004 is likely to arrest the decline. However, history has shown that the effect seems to fade off over time, and the underlying trend of a falling TFR reasserted itself. This disturbing fact continues to pose tough challenges to TMC in the long run.

Good cashflow – likelihood of dividend play. As a healthcare service provider, we believe the company is basically running a cash business. In the 1H FY2005, TMC generates a net profit of S$2.8m while its cash inflow from operations (excluding interest and taxes) was S$2.9m. With FCF expected to be around S$4m (estimated capex is S$2m) for the full financial year, we are looking at a dividend payout of 1.0 cents per share.

Hold but TP raised to S$0.245.Share price has outperformed since we initiated coverage at S$0.175 on 13 July 05, or return of 28.6% in about 3 months. With less than 15% upside from current price, we have no choice but to downgrade our recommendation to hold. Nevertheless, we are not ruling the possibility of re-rating the stock if management is willing to commit itself to a fixed dividend policy. Based on new set of assumptions, our DCF fair value is raised to S$0.245. Entry price is at 21 cents.



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Thomson Medical - SIAS Research
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Extracts of SIAS Report dated 4-Oct-04,

Update


  • Lower fertility rates: In a report released by the Singapore Department of Statistics (SDS), there was a noted decrease in the fertility rates in 2004 of Singaporeans across all age groups compared with those of 1994.
  • Aging population: Singapore’s population has grown older, with the median age of the resident population increasing from 20 years in 1970 to 36 years in 2004. This mainly resulted from the large proportion of post-war baby boomers that have moved into the 35-54 years age group in 2004. Elderly persons aged 65 and over increased to 8% of the resident population in 2004, up from 6.4% in 1994.
  • Worrisome replacement rate: Singapore’s total fertility rate has fallen to a historic low in 2004, to 1.24 children per resident female, compared to the replacement level of 2.1 per woman required.

Outlook


  • Thomson’s expertise becomes more valuable: Thomson Medical (TMC) is already one of the leading Obstetrics and Gynaecology (O&G) specialists in Singapore. It boasts many of the first breakthroughs in O&G technology and has a 25 year track record in providing specialised services. These include being one of the world’s first fertility clinics to produce a pair of twins from frozen eggs and frozen testicular sperm. We believe that TMC has the ability to leverage on its In-vitro-fertilisation (IVF) technology to further enforce its place as a specialist provider.
  • Thomson Fertility Centre: Established in March 1987, the centre has treated more than 2,000 couples, achieving more than 600 babies through the reproduction programmes and IVF techniques headed by Dr Cheng Li Chang. Increased interest in this aspect should help strengthen and promote the hospital’s expertise and services.
  • Reaching out: The Company’s women’s clinics are really a long-term initiative to reach into out to the population. By opening specialized O&G clinics bearing the Thomson Medical brand name, the company has positioned itself for greater market penetration.

Risks


  • Outbreaks: As previous outbreaks have proven, the Singapore healthcare industry is as vulnerable as other industries to major disease outbreaks. The danger of SARS or Bird Flu outbreaks is still present. Foreigner could avoid coming to Singapore for medical procedures and treatments. Furthermore, in the event that an outbreak does happen, and an employee or patient is infected, the hospital may have to temporarily shut down until the spread of disease is contained. This would most probably create long-term negative impact.

Valuation/Recommendation


  • Maintain Buy: We are reiterating our BUY rating on TMC with the target price of S$0.23 based on our DCF valuations. We expect earnings this year to improve compared to FY04, and should be updating our valuation after further guidance from management at the next results announcement.


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Thomson Medical
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My prediction for FY05 Results

  • EPS = 2.8cts to 3.2cts
  • NAV = $0.28
  • Dividend = $0.005 to $0.007 (Edited - Missed out one '0')


-- Edited by KK at 23:15, 2005-10-26

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Extracts fm blog, StockPick,


Comments



  • Improving NAV (from premium to discount)

    • IPO : Price $0.22 vs NAV $0.1949 (FY04)
    • Now : Price $0.185 vs NAV $0.2505 (mid-yr '05)

  • Profitable in 1H05

    • EPS is 1.33cts
    • If profitability continues to full-year, may declare dividends

      • Assuming FY05 EPS is aro' 2cts
      • Shld be able to give at least 0.5ct dividend
      • => 2.7% Net Yield @ $0.185

  • Purchase by Director

    • 150,000 shares twice in Jul & Aug
    • Either good indication that Thomson is doing well or director averaging down IPO shares :D


  • Re-designation of COO


    • May be bad as it indicates COO didn't perform up to expectations
    • May be good if purpose is to improve results in new area

Conclusions
Be warned, the above has been created to justify my recent additional buy of Thomson Medical shares. This will be intended for mid to long term hold as Thomson Medical looks like a potential good yield stock. Daily trading volume is very low, so it's not recommended for those who may need to sell in the short term as you may not be able to sell at a good price.



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