The new private one-stop ambulatory care centre that Health Management International acquired a 62.5% stake in will officially start operations soon.

StarMed Specialist Centre, in which HMI bought its stake in May 2018, has completed renovations and received its operating licenses from the Singapore Ministry of Health.

StarMed8.18The Day Surgery Centre at StarMed is a one-stop centre for diagnostic and surgical procedures that do not require admission into a hospital.
Photo: Company

Co-located with Park Hotel Farrer Park above Farrer Park MRT station, StarMed is the first private "one-stop ambulatory care centre" in Singapore.

It will initially focus on cardio-vascular, digestive, minimally invasive surgeries and diagnostic services.


Stock price 

61 c

52-week range

56 - 73c

Market cap

S$511 m

PE (ttm)

24 x

Dividend yield (ttm)

0.54%

1-year return

- 3%

Shares outstanding

837 m

Source: Bloomberg

HMI said it expects to incur start-up losses from StarMed's operations for 2 to 3 years.

CGS-CIMB analyst Ngoh Yi Sin forecasts RM3m-7m EBITDA loss per annum in its first three years of operations

HMI has just reported a 194% jump y-o-y in group net profit to RM60.6 million for FY2018 (ended June),

HMI

Share price: 
61 c

Target: 
79 c

Source: CGS-CIMB

(This large profit increase was mainly due to the one-off impact of the consolidation exercise completed on 27 March 2017 , whereby 100% of net income is now attributable to HMI shareholders.)



Trend drivers

Day
surgeries

1. Many procedures are subsidised at flat rates by the Ministry of Health.
2. Convenience of same-day discharge for patients.

Diagnostic imaging services

1. Increasing per capita healthcare spending.
2. Ageing population.
3. Expanding insurance coverage.
4. Healthcare awareness, early diagnosis.

StarMed is all about ambulatory care (ie patients don't stay overnight), with medical fees that are expected to be somewhere between those charged by private hospitals and government restructured hospitals. 

StarMed is targeting rising demand for day surgeries and diagnostic imaging in Singapore, with its "one-stop" proposition so patients who need various services will find them all under one roof.

 

HMI group highlights
(RM’000)

FY2018

FY2017

Change %

Revenue

467,597

435,765

7.3

Gross Profit

165,808

143,754

15.3

EBITDA

115,146

96,710

19.1

EBITDA margin (%)

24.6

22.2

2.4 pts

PATMI

60,596

20,590

194.3

Core PATMI (excluding non-operational and one-off items)

62,241

32,664

90.5

StarMed occupies four floors, totalling 16,000 sq ft, in one of the last commercial buildings approved in Singapore to house such a large medical centre.

For its purchase of a stake in StarMed, HMI paid S$6.9 million cash and injected a S$1.9 million shareholder's loan while assuming obligations of up to S$31.2 million worth of loans, which is in proportion to its shareholding.

Chins8.17HMI CEO Chin Wei Jia and CFO Chin Wei Yao. NextInsight file photo.The remaining 37.5% stake is held by a group of doctors.

HMI also owns two tertiary hospitals (Mahkota Medical Centre in Malacca and Regency Specialist Hospital in Johor), and a healthcare training centre in Singapore and has a network of representative offices in Indonesia, Malaysia and Singapore.


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