An Investor’s Look at a New Healthcare Kid on the Block: Singapore O&G Ltd

Singapore O&G LTD (SGX: 41X) is a relatively new company in Singapore’s stock market given that it was listed less than a year ago on June 2015 at a price of S$0.25. Early investors are likely happy campers at the moment given that the company’s shares are currently worth S$0.79 each, more than triple the listing price.

Let’s take a deeper look into the company to understand it better.

The business

Singapore O&G is a private specialist healthcare provider. Its focus is on women’s health and wellness, particularly on pregnancy care and delivery, the female reproductive system, and gynecological and breast cancer. That’s also how the company got its name – O&G is an acronym for obstetrics and gynaecology.

The company has since expanded its range of services with the acquisition of JL Laser & Surgery Centre Pte Ltd, JL Esthetic Research Centre Pte Ltd, and JL Dermatology Pte Ltd for a total sum of S$26.5 million. The acquisitions, which were completed on the final day of 2015, form a specialist dermatology clinic. Singapore O&G believes that the purchase will help contribute to the company as follows:

“(i) Provides the Group [referring to Singapore O&G] with in-roads into the practice of dermatology, which the Group currently does not engage in, (ii) will provide the Group with a diversified and recurrent stream of revenue, and strengthen the future financial performance of the Group and (iii) enable the Group to accelerate the expansion of its offerings complementary to women’s healthcare.”

The acquisition seems to be a smart one to me as post-natal dermatology issues can be quite a common occurrence. By making the acquisition, Singapore O&G can thus offer a new range of complementary services to its patients.

The financials

On the financial front, Singapore O&G recently reported full-year revenue growth of 21.2% from S$13.5 million in 2014 to S$16.4 million in 2015. This led to a commensurate 25.7% jump in profit from S$4.2 million to S$5.3 million. At Singapore O&G’s current market capitalisation of S$188 million, the firm’s valued at 35 times trailing earnings.

Moving on to the balance sheet, the company ended 2015 with a cash position of S$24.2 million and no debt. That’s a strong balance sheet.

Lastly, the company had generated positive free cash flow in 2015 to the tune of S$6.1million (S$6.4 million in operating cash flow and S$0.32 million in capital expenditure), up 33% from the free cash flow of S$4.5 million seen in 2014 (S$4.92 million in operating cash flow and S$0.37 million in capex excluding acquisitions).

From the company’s latest results and recent acquisitions, it seems like the company’s management is quite clear on how and where it wants to steer this ship over the long run. It might be worthwhile for investors to dig deeper to find out if Singapore O&G is worth investing in.

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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 Esjay does not own shares in any companies mentioned.