One-off loan conversion boosts OUE Lippo Healthcare's H1 profit to S$113.8m

CATALIST-LISTED OUE Lippo Healthcare 5WA : 5WA 0% (OUELH) posted a net profit of S$113.8 million for the six months ended June, boosted by a one-off S$110 million gain from a shareholder loan conversion.

Excluding the gain, the company posted a S$3.67 million net profit for the period, reversing the year-ago loss of S$1.26 million.

OUELH's revenue dipped 2 per cent year-on-year to S$9.67 million, mainly due to the weaker exchange rate of Japanese yen to Singapore dollar. Its revenue comprises rental income from 12 nursing homes in Japan, as well as earnings from pharmaceutical distribution and the Wuxi Lippo Xi Nan hospital in China.

The weaker exchange rate also contributed to a 10 per cent fall in OUELH's cost of sales for the half-year. Another reason for this was lower sales from the pharmaceutical distribution business, which was affected by delays in customers' orders.

Looking ahead, OUELH is closely monitoring the Covid-19 situation in China, given new Delta variant cases in the country. The construction of China Merchants - Lippo Obstetrics & Gynaecology Changshu Hospital and China Merchants - Lippo General Hospital Prince Bay Hospital are ongoing as planned. The hospitals are expected to commission in 2023 and 2024 respectively.

It is also remaining cautious in Japan. "Given that Japan is still in the midst of the latest Covid-19 wave, we will continue to monitor the situation closely," the company said.

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Meanwhile, OUELH's joint venture hospitals in Myanmar also continue to operate despite the political instability. The Pun Hlaing Hospital Hlaing Tharyar in Yangon has been designated as one of the few private hospitals to test and treat Covid-19 patients. The Myanmar operations are not expected to impact OUELH's results for this financial year.

Shares of OUELH closed at S$0.04 on Monday, down 4.76 per cent.

Amendment note: The headline previously indicated that the results are for H2. It should be H1 instead.