Singapore Medical Group H1 earnings more than double on demand in diagnostics, aesthetics

THE H1 net profit of Singapore Medical Group 5OT (SMG) more than doubled to S$7.2 million for the half-year period ended June 30, up from S$3.5 million a year ago due to rising demand in the group's aesthetics, Lasik and diagnostic imaging-related services.

The Catalist-listed group said its half-yearly profit was 5.1 per cent higher compared to pre-Covid-19 levels in H1 FY2019.

SMG's executive director and chief executive officer Beng Teck Liang said that the results came as "a bit of a surprise" and attributed the increased demand for procedures such as health check-ups, plastic surgery and Lasik by Singaporeans, who have been unable to leave for other countries like Malaysia and Korea to complete these treatments.

"Consumers have discovered that, actually, Singapore is very good at these services," he said, adding that medical consumers tend to develop a "strong stickiness" to these services and will return to the group for treatments.

In its financial results released on Tuesday, the Catalist-listed group posted earnings per share of 1.49 Singapore cents over the same period, up 106.9 per cent from 0.72 cent the year before.

Revenue for the half-year rose to S$49.7 million, up 27.6 per cent from the S$38.9 million a year ago. Notably, revenue is also 11.3 per cent higher than the S$44.6 million the group generated pre-Covid-19 in the first half of FY2019.

SMG attributed this to the S$19.8 million in revenue generated within its diagnostic and aesthetics segment, representing a surge of 76.5 per cent year-on-year.

The group's performance in the health segment was also resilient, with revenue growing by 8.7 per cent from a year ago to S$30.5 million despite the severe curb of medical tourism, which used to account for 15 to 20 per cent of revenue.

Dr Beng expressed optimism that as travel restarts, medical tourism will recover as Singapore's reputation as a trusted destination for more complex medical cases remains strong.

"It may not immediately recover to the way it used to be, but it will certainly start to trickle back and gain momentum as travel returns," he said.

The return of medical tourism, coupled with pent-up local demand for services because of the recent Phase 2 (Heightened Alert) measures, give him hope that the second-half of the year will be "incredible".

As at June 30, the group said that its net cash position also improved to S$18.1 million, from SS$15.8 million as at Dec 31, 2020 while its gearing improved to 4.1 per cent, from 6.4 per cent before.

No dividend has been declared or recommended for the half-year period, unchanged from a year ago.

In pursuit of organic growth, SMG said that it will look to strengthen its position within the women's and children's space by hiring new specialists in obstetrics and gynaecology (O&G) and paediatricians in addition to opening new clinics.

As for the group's overseas investments, SMG expects business conditions to remain challenging in the near term for two of the group's overseas entities, CityClinic Asia investments in Vietnam and PT Ciputra SMG in Indonesia, due to the pandemic.

Still, the group has sought to adapt to the pandemic with CarePlus Vietnam, its chain of specialist and primary-care clinics, seeing good traction after pivoting towards Covid-19 testing, said Dr Beng.

Furthermore, the group noted that City Fertility, its Australian partner and one of Australia's largest in-vitro fertilisation and fertility service groups, is in the final stages of closing an earnings accretive acquisition that will help it enter the Western Australian market, where it currently has no presence.

Shares of SMG closed at S$0.33 on Tuesday, up 1.5 per cent.

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