Earlier this month, Singapore O&G Ltd (SGX: 1D8), a healthcare service provider that specialises in women’s health, obstetrics, oncology and recently pediatrics, released its earnings update for the first half of 2018. Here are five things to take away from its earnings announcement.
1. Revenue and earnings grows
For the second quarter of 2018, Singapore O&G’s revenue jumped 19% to S$8.6 million, an increase from S$7.3 million in the same quarter last year. Profit from operations increased 66.5% to S$4.4 million. However, the higher profit was partly due to the one-off receipt of the settlement sum of S$1.25 million from its former lead director Mr Christopher Chong. If we excluding the settlement sum, profit from operations would have been S$3.15 million, up 21% from a year ago.
For the first-half of 2018, the group’s revenue was up 18.1% to S$16.8 million. Operating profit came in at S$7.3 million, up 45.7% from the previous year. Earnings per share for the six-month period was 1.31 cents per share. However, adjusted to exclude the one-off settlement receipt, earnings per share would have been 1.04 cents, 19.5% higher than in the previous year.
2. Business segments
The group’s business can be divided into the obstetric and gynecology (O&G) segment, the cancer-related segment, and the paediatric segment.
The higher revenue recorded for the second quarter of 2018 was due to a S$0.9 million and S$0.3 million revenue increase from the O&G and cancer-related segment respectively. In addition, its new paediatric segment contributed S$0.2 million, mainly from its two SOG Children Clinics.
3. Financial position and cash flows
Singapore O&G maintained its rock solid balance sheet with S$18.2 million in cash and equivalents and zero debt. The group generated S$6.1 million cash from its operations and spent just S$73,165 on capital expenditures over the six-months, giving it over S$6 million in free cash flow.
4. A look ahead
Singapore O&G extended its services to the general paediatric and adolescent medicine services on 1 July 2017, but as this effort is still in its early stages. The group expects the contribution from this segment to be moderate for the remainder of 2018.
Singapore O&G declared an interim dividend of 0.8 cents per share. The dividend represents a 61% payout ratio.
5. A look at valuation
Singapore O&G’s share price has remained largely unchanged since its earnings update earlier this month. It currently trades at S$0.35 per share, giving it an adjusted annualised price-to-earnings multiple of around 16, and a dividend yield of 4.83%.
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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.