Singapore Medical Group Q1 net profit up 22.2%

CATALIST-listed Singapore Medical Group (SMG) announced on Monday a 22.2 per cent increase in first-quarter net profit to S$3.8 million from S$3.1 million in the previous year, due to a surge in demand for the group's aesthetics, Lasik and diagnostic imaging-related services.

The group is thus focusing on the expansion of key specialist verticals within its diagnostic and aesthetics business segment. It remains "cautiously optimistic" on its health segment and will further organic growth initiatives within key healthcare verticals such as women's and children's health, said its executive director and chief executive officer Beng Teck Liang in a statement on Monday.

He said that despite the significant decline in medical tourism, which used to account for around 15 to 20 per cent of the group's revenue, SMG was able to tap its diversified business model to take advantage of structural shifts in demand.

"While the outlook for medical tourism remains uncertain, we expect domestic demand for diagnostics and aesthetics to continue rising and we are poised to capture opportunities for growth within these verticals."

For the three months to March 31, revenue was up 7.6 per cent to a quarterly record of S$24.8 million due to the rising demand as business resumed.

The group's core business operations continued to generate strong positive operating cash flows amounting to S$3.9 million for the quarter, while maintaining a cash balance of S$26.5 million as at March 31.

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After accounting for total borrowings amounting to S$8.1 million, the group's net cash position improved to S$18.4 million, up from S$15.8 million as at last Dec 31. Net gearing ratio also dropped to 5.1 per cent from 6.4 per cent the previous quarter.

During the period of tightened curbs of social gatherings and stricter border measures from May 8 to May 30, the group will remain fully operational, with the relevant enhanced safe-management practices and social-distancing measures from the Ministry of Health implemented across all of its clinics, it said.

SMG is looking to strengthen its position as a leading private specialist healthcare provider within the women's and children's space through the hiring of obstetricians, gynaecologists and paediatricians in addition to opening new clinics. Its flagship women's health centre is in Mount Elizabeth Specialist Centre in Novena, and it has a network of 14 specialist clinics which extend across the heartlands.

SMG has also increased the capacity of its diagnostic services with the addition of a new magnetic resonance imaging machine in its Novena imaging centre. This raised the group's MRI capacity by over 20 per cent as of May 1.

Operations overseas remained resilient, with the group reporting its first turnaround of its share of results from joint venture entities and associates, which amounted to S$200,000, compared with a loss of S$12,000 the previous year.

In Vietnam, the group's 26 per cent-owned overseas entity, CityClinic Asia Investments, continues to gain traction with rising patient loads amid increasing demand for specialist healthcare in the country. Despite the pandemic, the group's operations there, which operate under the CarePlus Vietnam brand, continue to grow; a third medical centre has opened in Ho Chi Minh City.

In Indonesia, the group operates two eye centres in Jakarta and Surabaya via a joint venture with property developer Ciputra Group. For the first quarter, its 40 per cent-owned joint venture entity, Ciputra SMG, reported "significant increases in revenue and profitability" following the newly opened eye centre in Surabaya in August 2020.

SMG has also benefited from rising patient volumes from its partnership with CHA Healthcare and City Fertility in Australia.

SMG ended Monday down 1.6 per cent or 0.5 Singapore cent to 31 cents.