Medical skincare provider Niks Professional to raise S$5 million in Catalist listing, eyes China growth

MEDICAL skincare provider Niks Professional is offering 21.8 million shares at S$0.23 apiece as it seeks to list on the Catalist board of the Singapore Exchange.

The 21.8 million shares comprise 20.8 million placement shares and one million public shares. The placement shares include around 3.7 million reserved shares for management, employees and directors.

The new shares will represent 16.8 per cent of the company’s enlarged share capital.

The company will raise S$5 million in gross proceeds, with net proceeds coming to S$3.3 million. Of the latter, 24 per cent will go towards funding organic growth; 66 per cent towards acquisitions, joint ventures and/or strategic alliances; and 10 per cent for general working capital.

Based on the issue price of S$0.23, Niks Professional will have a market capitalisation of S$29.9 million at listing.

​​Founded in 1998 by a husband-and-wife team, Niks Professional has three clinics across Singapore – in Orchard, Jurong East and Tampines – offering services such as light and laser procedures, injectables and mole removals.

The company also has three retail outlets that sell Niks skincare products and provide facial services, and a business-to-business operation in China.

The company is led by co-founder Cheng Shoong Tat, who holds the chairman and chief executive positions. His wife, Dr Ong Fung Chin, started her own clinic in 1994 and serves as Niks Professional’s president and chief medical officer.

In an interview with The Business Times, Cheng said that the company’s three-way approach combining “family practice” dermatology, aesthetic medical services, and skincare products is a differentiator.

“Family practice” dermatology means its doctors are all general practitioners with an interest in skin diseases and aesthetics, rather than skin specialists. Their services are cheaper, and focused on less serious diseases – such as acne and eczema.

Aesthetic medical services is a competitive field in Singapore, Cheng said, with many new players entering over the last two years. This has resulted in “some degree of price competition”.

This three-way approach also proved useful during the Covid-19 pandemic, when aesthetic medical businesses were deemed non-essential and directed to close. All Niks Professional’s clinics were allowed to remain open because of their dermatology component.

Nevertheless, the company’s profit weakened in the most recent full year. Niks Professional recorded S$2.8 million in net profit for FY2022, down from S$3.3 million the previous year. Its FY2022 revenue stood at S$11.1 million, down 5.2 per cent.

“(We) were affected by (the) cancellation of some appointments for medical and facial treatments by our patients and customers who resumed their overseas travels for various purposes,” the company said.

Other factors impacting performance were an “extended break” taken by one of its key doctors in FY2022, as well as China’s Covid-19 lockdowns during the year.

Despite the revenue dip, Cheng is seeking a listing at this time to grow the business. He believes that the company has “plucked all low-lying fruits”, and going public will enable the company to expand through avenues such as strategic alliance acquisitions with complementary partners or by hiring more doctors.

“For small companies, if you’re not listed, it is quite difficult to be noticed,” he said. “We felt that (not being listed) impacted our ability to pursue clients, particularly in China.”

The company intends to tap the capital raised through the IPO to add clinics and shops, as well as expand its China presence.

Cheng said that China’s market is bigger and more defined than Singapore’s; although, with at least six competitors, Niks Professional will need to stay on its toes. To solidify its place in China, the group intends to increase its direct sales to doctors and end-customers. This should “fetch better margins” than selling through agents, Cheng said. “We want to break out of our current narrow sales channel. The current market leader (in China) is strong in direct sales,” he added. “We see them as an encouraging model.”

In Singapore, the company plans to open a new retail outpost in the west and a clinic in the north. It will also buy more equipment for its clinical services, add three more doctors to its current roster of five. There are also plans to boost its headcount across other departments.

Cheng said that the demand for aesthetic services is going up, while an ageing population means certain skin diseases – particularly eczema – are more prevalent.

The group does not have a fixed dividend policy, but intends to recommend dividends of no less than 50 per cent of the net profit after tax for FY2023, and 40 per cent in FY2024.

Applications for Niks Professional’s shares close at noon on Oct 25. Shares of Niks Professional are expected to commence trading on a ready basis at 9am on Oct 27.