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ISEC Healthcare Ltd’s Earnings Update: Another Fine Quarter

Eye care specialist, ISEC Healthcare Ltd (SGX: 40T), recently reported its earnings update for the second quarter of 2018. The company, which has a team of 21 specialised doctors and four general practitioners, delivered yet another strong set of results, with both revenue and profit climbing at double-digit pace.

Here are some of the key highlights from its earnings update:

1. Revenue for the second quarter of 2018 was up 13% on year to S$10.4 million. Together with lower costs, profit before tax was up 19% to S$2.9 million, while profit after tax was 16% higher at S$2.3 million.

2. For the first half of 2018, revenue grew 13% to S$20.0 million. Profit before tax was up 23% to S$5.6 million, with profit after tax up 22% to S$4.4 million.

3. Below is a table outlining the key financials:

Source: Author’s compilation of data from earnings report

4. Higher patient load in both its Malaysia and Singapore specialised eye care centres was the main reason for the revenue and profit growth. As of 30 June, the group has four ambulatory surgical centres in Malaysia and one in Singapore located at Gleneagles Hospital. It also has a network of four general practitioner clinics in Singapore.

5. The chart below illustrates the group’s revenue by geography:

Source: ISEC Healthcare Ltd 2018Q2 Earnings Presentation

As you can see, there was higher revenue recorded in both its Singapore and Malaysia markets.

6. The group maintained its rock solid balance sheet with S$26.0 million in cash and equivalents and zero debt. It has S$4.0 million more in cash than the corresponding period last year. Net asset value per share was 8.3% higher, at 13 Singapore cents.

7. In the second quarter of 2018, ISEC generated S$2.8 million in cash through its operations and spent S$260,000 on capital expenditures.

8. The group has declared an interim dividend of 0.78 Singapore cents per share, up from 0.5 Singapore cents declared in the first half of 2017. This is equivalent to a payout ratio of 93%.

9. Going forward, the group discussed the implications of a weakening Malaysian Ringgit, saying:

“Our Malaysia operations contributed a significant portion of the Group’s revenue. The movement in medical tourism in Malaysia is expected to be closely correlated to the weakening of the Malaysian Ringgit, hence stronger purchasing power of foreign currencies, and vice versa. However, as the presentation currency of the Group is in Singapore Dollar, the revenue from Malaysia operations translated to Singapore Dollar will be impacted by foreign exchange movements.”

Overall, ISEC had another good quarter with most operating metrics improving year-on-year. At the time of writing, shares of ISEC trade at S$0.29 per piece. This gives an annualised price-to-earnings of 17.4, a price-to-book ratio of 2.2, and a tasty dividend yield of 5.1%.

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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 Jeremy Chia doesn’t own shares in any companies mentioned.