Healthway

Healthway: Released 3Q13 results which were largely propelled by a one-off item, as net profit came in at $10.1m (+846% y/y, -56% q/q) and revenue at $20.4m (+3% y/y, +1% q/q). The result brings the group’s 9M13 earnings to $34.6m (+619%). The sharp improvement in the bottom line for the quarter was mainly due to a 703% surge in operating income to $24.2m, on back of the disposal of available-for-sale financial assets, which was reclassified from equity. Total operating costs meanwhile surged 57% to $33.5m, mainly due to an impairment loss of $13m recognized for loan receivables, as the amount was deemed to be impaired in view of the existing operating conditions in China. The increase was offset slightly by a decrease in other operating expenses, due to lower rental costs and administrative fees paid, as well as decrease in consumables and laboratory expenses. Going forward, the group notes that its specialist clinics continue to show steady growth due to expansion of patient base, and will continue to open more new clinics in the primary care sector. Apart from streamlining its operations, aims to leverage on IT to automate and improve operational efficiency and process flow. At current price, valuations are undemanding with Healthway trading at an annualized 3.2x FY13 P/E, with net gearing at a relatively low 20.4%.