A New Medical-kid On The Block

stethoscopeAt the end of June this year, Singapore Press Holdings (SGX: T39) pulled the plug to list its assets into a Real Estate Investment Trust (REIT) due to weak global markets.

On the other hand, International Healthway Corporation (IHC) (Catalist: 5WA), braved the storm and proceeded to list on the Catalist board on 8 July 2013. Its initial public offering (IPO) price was $0.48. With the number of outstanding shares at 1,604,845,000, the market capitalisation at flotation was $770 million. This would make IHC the largest listed company on Catalist.

IHC closed at $0.455 on its debut, down 9.4% from its IPO price. At the time of writing on 9 July, the price at $0.435 is down a further 4.4%.

A Look at the Business

IHC is an integrated healthcare services and facilities provider. It has a portfolio of 15 medical real estate, healthcare-related assets and integrated mixed-use developments in China, Japan and Malaysia. It has four pending projects and three pipeline projects on the cards too.

IHC is connected to another locally-listed company, Healthway Medical Corporation (SGX: 5NG). Both companies share the same three founding members.

Looking at page 296 of the unaudited financial statements in the IPO prospectus, revenues for 2011 was $35.3 million, while in 2012 they were at $37.8 million. Other operating income for 2012 came in at $53 million. This income included fair value gains on investment properties and investment properties under development for 2012 of $49 million.

Profit before tax for 2011 was $13.8 million. For 2012, it was $53.3 million. Stripping out the fair value gains, the profit before tax for 2012 would have been $4.3 million.

On the balance sheet, it carries a total debt of $241 million for 2012. To me, this seems a heavy burden for the company.

Its cash flow from operations in 2012 was $23 million.

Future Catalysts

In the future, IHC says that it may eventually establish listing vehicles, such as REITs, to enhance shareholders’ value. Also, the aging population in Japan and the emerging middle class with rising income in China may bode well for IHC for the long-term.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.