Background: Health Management International (HMI) is a regional heathcare and education services provider with presence in Singapore, Malaysia, Indonesia, Cambodia and China. It operates 2 tertiary care hospitals in Malaysia, 288-bed Mahkota Medical Centre (MMC) in Malacca and the new 218-bed Regency Specialist Hospital (RSH) in Johor. It is also a provider of healthcare education and training in Singapore, through HMI Institute of Health Sciences.
Recent development: HMI posted a positive FYJun11 net profit of $2.0m after 2 years of losses, helped by higher patient load as well as fair value gain from its investment properties. However, RSH is still suffering from start-up losses.
Key ratios…
Price-to-earnings: 65.1x
Price-to-NTA: 1.6x
Dividend per share / yield: Nil
Net cash/(debt) per share: (S$0.046)
Net gearing: 78.4%
Share price (S$) 0.095
Issued shares (m) 577.272
Market cap (S$ m) 54.84
Free float (%) 36%
Recent fundraising activities Nil
Financial YE 30 Jun
Major shareholders Nam See Investment (30%), Kabouter Management (5.1%)
YTD change -20.83%
52 week px range 0.086 – 0.140
Our view
Riding on Malaysia’s growing healthcare needs. HMI seeks to benefit from an increasing demand for quality healthcare services in Malaysia. It has been able to attract domestic and foreign patients looking for quality healthcare at affordable prices. The new RSH aims to profit from Johor Bahru’s rising population as well as foreign patients seeking affordable treatments overseas. HMI has obtained the approval from Singapore’s Ministry of Health to allow for the use of CPF Medisave in its hospitals.
Growing patient volumes. In FYJun11, revenue for MMC and RSH increased by 20% and 98% YoY respectively. MMC is well established and operating at close to full capacity. There are plans to further expand its capacity. However, RSH, which opened in Nov 2008, is still under-utilised. Nevertheless, patient volume has more than tripled over 2 years and occupancy also increased. In FYJun11 alone, patient load increased by 57%.
RSH needs more doctors. In order to achieve higher utilisation and patient load, RSH needs to recruit more doctors. It only has 23 full-time and part-time doctors currently. Following higher staffing, it can then increase its wards, operating theatres and beds to meet various demands.
Longer term plans. These include opening of a haemodialysis centre, an In-Vitro Fertilisation centre, and emergency medicine section. The extension of the Hospital block and Medical block also form part of the considerations.
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