2018 marked the 10th anniversary of ISEC Healthcare Ltd‘s (SGX: 40T) business, which was founded in 2007 in Malaysia. The group has four eye care centres in Malaysia and one in Singapore and counts 24 ophthalmologists and two anesthesiologists among its ranks. It also has a network of five general practitioner clinics in Singapore, which provide referrals to its maiden eye care clinic here.
Recently, ISEC released its 2018 annual report. Here are some highlights investors may have missed.
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Key developments in 2018
In August 2018, ISEC expanded its general medical services by acquiring a 25% stake in I Medical & Aesthetics Pte Ltd. ISEC non-executive chairman and independent director Sitoh Yih Pin said the investment is expected to “bring new business opportunities in the field of general medical consultations and aesthetics services in Singapore.”
In my view, more important than diversifying the income stream, the acquisition will bring about cross-selling and referrals to its existing business as well as offer new sources of potential patients.
ISEC also incorporated ISEC Myanmar last year. ISEC Myanmar will begin operations in the second quarter of 2019 and will mark the group’s maiden entry into Myanmar. I believe initial revenue contributions from this new market will be minimal, but if positioned properly, the new market could open doors for the future.
Growth through higher visitor arrivals and acquisitions
In 2018, the group managed to grow its revenue by 9% to S$40.4 million. Management attributed higher patient visits to its specialised eye care centres in Malaysia and Singapore as the key reason for this growth.
Profit attributable to shareholders also rose 6.3% to S$8.4 million, extending ISEC’s streak of growing its profit.
The charts below show the revenue and profit growth over the last five years.
Source: ISEC healthcare 2018 Annual report
Balance sheet and cash flow
Lastly, ISEC healthcare has maintained a healthy balance sheet. It has no debt and is sitting on S$27.1 million in cash and cash equivalents. This is an improvement from the previous year’s cash position of S$24.8 million.
ISEC generated S$12.3 million in cash flow from operations before working capital changes. Including working capital requirements and taxes paid, the company generated S$10.4 million in cash, a 26% improvement from 2017.
As the company’s business model is asset-light and generates a lot of cash, ISEC was able to pay out a healthy dividend of 2.54 Singapore cents in 2018.
At the time of writing, shares of ISEC Healthcare change hands at S$0.32. This translates to a price-to-book ratio of 2.5, a trailing dividend yield of 7.9%, and a price-to-earnings ratio of 19.9.
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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.