Singapore O&G Ltd’s Latest Earnings: Strong Growth Seen

Singapore O&G Ltd (SGX: 41X) released its earnings for the first-half of 2016 yesterday.

For some context, Singapore O&G is a healthcare services provider that specialises in women’s health and wellness. Right now, the company has 10 medical specialists under its banner dealing with pregnancy care and delivery, the female reproductive system, gynaecological and breast cancer, and more. The company got listed only in the middle of 2015; you can find out more about its IPO right here.

With that as a backdrop, let’s dig into the firm’s latest earnings.

Financial highlights

The following’s a quick rundown on some of the latest financial figures for Singapore O&G:

  1. In the first-half of 2016, Singapore O&G’s revenue surged by 80.5% from S$7.7 million a year ago to S$13.9 million.
  2. Consequently, net profit spiked by 90.2% from S$2.7 million to S$5.2 million on a year-on-year basis during the same period.
  3. Singapore O&G ended 30 June 2016 with a pristine balance sheet with US$19.8 million in cash and cash equivalents and no debt. But, this is a slight deterioration from the net cash position of US$22.3 million the company had at 30 June 2015.
  4. On the cash flow front, Singapore O&G’s operating cash flow soared by 73% from S$2.70 million in the first-half of 2015 to S$4.67 million. But free cash flow for the reporting period was negative due to S$6.32 million in capital expenditure (including S$6.0 million used for an acquisition of businesses); capex was just S$0.30 million a year ago.
  5. The company had declared an interim dividend of 1.53 Singapore cents per share for the reporting period, up significantly from the 0.88 Singapore cents per share seen a year ago.

In all, Singapore O&G has delivered strong growth in both its top- and bottom-line. While the business had negative free cash flow, the balance sheet remains debt-free.

Business developments and the road ahead

Singapore O&G’s revenue growth was attributed to two reasons:

  • S$4.3 million of new revenue from the company’s Dermatology business which started in January 2016
  • Increase in patient-loads in the company’s Obstetrics & Gynaecology and Cancer-related segments.

Dr. Ng Koon Keng, the chief executive of Singapore O&G, had given more details in the earnings release on how the different specialties fared:

“Even though the birth rate in Singapore remains challenging, our Obstetrics segment continues to improve market share with 801 deliveries in 1H 2016. This is 7.0% of all deliveries in private hospitals.

Dr. Natalie Chua performed outstandingly as she delivered 67.1% more babies compared to same period last year. With a new Obstetrician Dr. Hong Sze Ching having joined us in July this year, we are optimistic she will add meaningfully to our delivery numbers.

Our Cancer Specialists, Dr. Cindy Pang, Dr. Radhika Lakshmanan and our latest Breast Specialist, Dr. Lim Siew Kuan also contributed significantly to our Group’s revenue. Together, they achieved a combined revenue of S$1.3 million for 1H 2016. With their help, we continue to do our part in our nation’s fight against cancer.

In her maiden contribution, our Dermatology segment headed by Dr. Joyce Lim contributed materially to our revenue. Our Dermatology segment now accounts for 31.0% to the Group’s revenue. With the roll out of our marketing campaign for Dr. Lim’s proprietary products and cross referrals, we hope to add value to both our Dermatology segment’s top and bottom lines.”

Ng also had some words to share on the company’s future. He said::

“We remain positive moving forward and in line with our commitment to a high dividend payout rate, barring any unforeseen circumstances, the full year final dividend should be larger than the interim dividend. We take this opportunity to thank our shareholders for their loyal support.”

At its closing share price of S$1.195 yesterday, Singapore O&G is trading at a 35 times trailing earnings.

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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 James Yeo doesn’t own shares in any companies mentioned.