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Health Management International Ltd’s Stock Is Up 517% In 5 Years: Here Are 3 Things Investors Should Know

Health Management International Ltd (SGX: 588) is a healthcare services provider with a presence in Singapore, Malaysia, and Indonesia.

It owns and operates two hospitals in Malaysia (the Mahkota Medical Centre in Malacca and Regency Specialist Hospital in Iskandar Malaysia) with a total bed capacity of more than 500.

The company also has a healthcare training centre in Singapore, the HMI Institute of Health Sciences. It provides Skills Future Singapore accredited training courses for the healthcare support sector.

Over the past five years, Health Management International’s stock price has climbed by a massive 517%. This led me to take a closer look at the company’s business. Here are three things I found that may interest investors:

1. Solid business growth

From its FY2012 (fiscal year ended 30 June 2012) to FY2016, Healthcare Management has grown its revenue from RM 209.2 million to RM 397.8 million. This translates to an impressive compound annual growth rate of 17.4%. Over the same time frame, the company’s net profit attributable to shareholders grew even faster, from a negative RM 0.5 million to a positive RM 19.9 million.

2. An above-average return on equity

The return on equity (ROE) metric measures a company’s ability to generate a profit with the shareholder’s capital it has. In general, a high ROE (without the presence of high levels of debt) comes together with a quality business.

Right now, the median trailing ROE for the 30 companies that make up Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), is less than 10%, according to data from S&P Global Market Intelligence. But, Health Management managed to generate a ROE of 14.4% in the last 12 months.

3. The presence of owner-operators in the company

Dr Gan See Khem and her family (this includes her husband and children) collectively control 52.08% of Health Management’s total shares as of 19 September 2016. Dr Gan is the company’s executive chairman and managing director. Her children, Chin Wei Jia and Chin Wei Yao, are the company’s chief executive officer and chief financial officer, respectively.

So as you can see, Health Management is a company whereby the management team is made up of controlling shareholders.

Though it can be difficult to judge whether management’s interests are aligned with minority shareholders, there’s one thing we can be certain of. Minority shareholders of Health Management has benefited greatly over the past five years given the aforementioned 517% gain in the company’s stock price.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.