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The Tiny TalkMed Group Ltd Is A Big Winner: Here’s How It Makes Its Money

TalkMed Group Ltd (SGX: 5G3) is a relatively tiny new company in Singapore’s stock market. It has a market capitalisation of S$657 million and was listed only in January 2014.

But in its short two-plus years in the stock market, TalkMed has been a big winner – its current share price is S$1.01, 405% higher than its listing price of S$0.20.

In here, I want to look at how this big winner makes its money. When investors know TalkMed’s revenue sources, they can better appreciate the risks and opportunities associated with the company.

TalkMed is essentially a group of doctors who provide tertiary healthcare services in the field of medical oncology, stem cell transplant, and palliative care to oncology patients. Oncology is a branch of medicine that deals with cancer. The company’s services are provided through the Parkway Cancer Centre.

In 2015, TalkMed had S$65.72 million in revenue, up 4% from 2014. The company had eight clinics and 13 doctors in that year. Some of the private hospitals that house TalkMed’s clinics include Gleneagles Hospital Singapore and Mount Elizabeth Medical Centre.

Let’s look at the geographic spread of TalkMed’s revenue. The company entered Vietnam in 2014. By 2015, it had made S$0.33 million in revenue from the country, which amounts to merely 0.5% of total revenue during the year. The rest came from the company’s operations in Singapore. That said, foreign patients have accounted for more than 60% of TalkMed’s patient load over the past few years.

We can now turn to TalkMed’s revenue breakdown by business for 2015, which is shown in the chart below:

talkmed-revenue-sources
Source: TalkMed 2015 annual report

Consultancy Services is where TalkMed provides specialist doctors and clinic staff to Parkway Cancer Centre. The segment also sees TalkMed providing consultancy services to THU CUC International General Hospital in Vietnam.

Management Fees refers to activities such as the billing of salaries and rental to Parkway Cancer Centre and the billing of expenses to THU CUC International General Hospital for the provision of consultancy services.

Stem Cell services is tiny in the scheme of things for TalkMed, and it is where the company provides stem call banking and processing services.

All told, TalkMed managed to earn $37.33 million in profit in 2015 from $65.72 million in revenue. That works out to be a fat profit margin of 56.8%, which is one of the highest amongst healthcare companies in Singapore.

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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 Ong Kai Kiat does not own shares in any companies mentioned.