Singapore Medical Group

Singapore Medical Group: In a weekend interview with the Edge Magazine, Singapore Medical Group (SMG’s) newly appointed CEO, Dr Beng Tech Liang sheds more light on the group’s recent planned entry into Jakarta. To recap, SMG has signed a non-binding MOU with Indonesia’s Ciputra group on 8th Jan’14, to establish a 4,000 sf eye clinic in Ciputra World 1 shopping mall in Jakarta, aimed at providing Lasik and cataract surgery. The MOU is valid for six months or once a JV company by the two has been established. Should the eye clinic be successful, Beng plans to further introduce a slew of other SMG’s medical services e.g cancer treatment and gynaecology etc, into its Indonesian operations, which could potentially set the precedence for the group’s future expansion overseas. Year-to-date, SMG’s share price has soared 68%, which incidentally coincides when Beng was appointed the group’s CEO in Dec’13, after he and Pure Beauty Investments took control of SMG. As a guide, Pure Beauty Investments counts Mr Tony Tan Choon Keat, founder of Parkway Holdings and Dr Ho Choon Hou, co-founder of Cordlife Group as its directors. Effectively, Mr Tony Tan and Dr Ho have been appointed Non-executive chairman and independent director of SMG respectively. However the departure of SMG’s former CEO and founder has triggered a breach of banking covenants, and SMG is currently seeking waivers for these breaches. Separately, SMG is attempting to raise $7.4m via a rights issue of 72.9m new shares at 10.5¢, where $5.2m will be set aside for the redemption of its convertible preference shares and the remainder for repayment of bank overdrafts and loans. For 1HFY14, SMG registered a net loss of $1.64m versus earnings of $0.5m a year back, as revenue fell 25% to $11.9m. Nevertheless, given the ‘success stories’ of Cordlife and Parkway Holdings, and the show of confidence by Ciputra group, investors could be lured to take comfort from the participation of these astute investment professionals, as they attempt to uncover value in the loss making company. At current price, SMG trades at a hefty 11.8x P/B.