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This Medical Company Has Gained 420% Since January 2014: What’s Next?

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There’s a medical firm in Singapore’s share market which went public at a price of S$0.20 on 30 January 2014. At its closing price of S$1.04 yesterday, the share has gained 420% thus far.

During the same period, other healthcare shares like Raffles Medical Group Ltd. (SGX: R01) and IHH Healthcare Bhd (SGX: Q0F) only managed to gain 33% and 36% respectively.

The company in question is none other than TalkMed Group Ltd (SGX: 5G3), a provider of medical oncology and palliative care in Singapore. Let’s take a quick look at this company.

The business

According to its website, TalkMed consists of “a group of doctors providing tertiary healthcare services in the fields of medical oncology and palliative care to the oncology patients in the private sector in Singapore through Parkway Cancer Centre (PCC). Tertiary healthcare involves specialised care of a high complexity requiring specialised skills, personnel and support services. [The company has] specialists with special interests in breast cancers, head and neck cancers, gastro-intestinal cancers, uro-gynaecological cancers, and haematology malignancies.”

TalkMed also provides a screening programme, called CANSCREEN, which provides screening services for individuals who are at a higher risk of developing cancer.

The numbers

In 2013 (TalkMed’s fiscal year coincides with the calendar year), revenue grew by 8% to S$56.3 million while net profit actually dipped by 12% from S$32 million in 2012 to S$28.2 million. An increase in one-off expenses related to TalkMed’s listing had been partly to blame for the decline in profit.

It’s notable that the company has a high net margin of 50% – this is also not surprising as the firm is mostly service-based and thus has very little expenses.

In the first half of 2014, TalkMed saw its revenue grow by 12% year-on-year to S$30.2 million on the back of increased patient visits and increase in turnover from patients requiring higher intensity care. The top-line managed to flow all the way down to the bottom-line as net profit saw growth of 19.5% to S$18.8 million.

As of 30 June 2014, TalkMed’s balance sheet was as formidable as a surgeon’s incision is precise: The company carried a cash hoard of S$46.4 million with no debt. That’s a huge increase compared to the end of 2013 when it had S$24.9 million in cash with no debt. It must be noted however that a large part of the increase in cash was due to net proceeds of around S$17 million from its IPO.

The future

According to its prospectus, 60% of the listing net proceeds will be used to expand its talent pool and healthcare services while the remaining S$6.9 million will be used for overseas expansion and the improvement of the quality of its medical services.

Currently, TalkMed does not provide any primary or secondary healthcare service but it has plans to do so in order to become a “more integrated medical service provider, covering the entire value chain of the healthcare industry.”

On the overseas expansion front, the firm is looking to bolster its brand through establishing specialist cancer clinics and state-of- the-art medical facilities in key overseas cities within suitable markets.

TalkMed is currently trading at a historical price-to-earnings ratio of 21. It paid out an interim dividend of 2.13 Singapore cents per share in the second quarter of 2014, giving it an annualised dividend yield of 4.1%.

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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.