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ISEC Healthcare Ltd’s Latest Earnings: What Investors Should Know

ISEC Healthcare Ltd  (SGX: 40T) reported its third-quarter earnings last Friday. The reporting period was for 1 July 2016 to 30 September 2016.

As a brief background for context later, ISEC Healthcare (where ISEC stands for “International Specialist Eye Centre”) provides specialist medical eye care services in Singapore and Malaysia. The company had listed on October 2014 and you can read more about it here.

Financial highlights

The following’s a rundown on some of the company’s latest financial figures:

  1. For the reporting quarter, revenue is up 18% year-on-year to $7.42 million. Sales were boosted by the acquisition of Southern Specialist Eye Centre (SSEC) in late 2015.
  2. Net profit attributable to shareholders for the reporting quarter was $1.68 million, up 152% compared to a year ago.
  3. For 2016’s third quarter, earnings per share (EPS) came in at 0.34 cents, up 127% from a year ago.
  4. Cash flow from operations was $1.9 million with capital expenditures coming in at $499,000. As such, the eye care specialist generated free cash flow of $1.4 million, up from the $1.31 million seen in the third-quarter of 2015.
  5. As of 30 September 2016, ISEC Healthcare has $26.9 million in cash and equivalents and no debt. This compares with the $27.3 million in cash and equivalents and no debt it had on 30 September 2015.

In summary, ISEC Healthcare saw both its top-line and bottom-line grow. It also experienced growth in its free cash flow. The eye specialist centre also maintained a clean balance sheet. The board of directors recommended an interim dividend of 0.66 cents per share; there was no interim dividend for 2015.

Operational highlights and future outlook

Revenue for Singapore rose 23.2% to $19.1 million for the first nine months of 2016. Meanwhile, its Malaysian operations saw a 32.2% increase in revenue for the same period, recording RM 56.7 million in sales.

ISEC Healthcare included the following commentary on its outlook:

“Overall, our business remains positive and mainly driven by the ageing population, increased awareness of eye disorders, increased uptake of private insurance and growth of medical tourism in our Malaysia operations. The Group’s Singapore business may be affected by a strong Singapore dollar against the currencies of neighbouring countries where some of our customers come from.

Notwithstanding the termination of the memorandum of understanding with Hai Yen Anh Tran Company Limited and hence no formalised agreements to be proceeded with, the Group maintains a positive outlook on business opportunities in Vietnam, and continues its focus on expanding in the Asia Pacific region. The Group will consider the acquisition of assets, business and companies that are in similar specialty or are complementary to the Group’s existing businesses.

The Ringgit Malaysia had shown slight weakening against the Singapore Dollar during the 3 month period ended 30 September 2016. The foreign exchange rate will continue to impact the Group’s overall performance moving forward as a significant portion of its revenue is derived from Malaysia. The Group will continue to monitor closely the impact of the foreign exchange rate on the Group’s financial position.”

For a bit of context, ISEC Healthcare had terminated a memorandum of understanding to form a joint venture with Hai Yen Anh Tran.

At its closing share price of yesterday of $0.31 last Friday, ISEC Healthcare traded at over 30 times trailing earnings with a trailing dividend yield of 2.8%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.