ISEC Healthcare (IPO)

ISEC Healthcare: Upcoming IPO at an offer price of $0.28/share for 70m placement shares, priced at 21.2x FY13 P/E compared to Singapore and M’sia listed peers of 30.3x. ISEC is a comprehensive medical eye care service provider that specialises in cataract and refractive surgery (including LASIK), vitreoretinal diseases, corneal and external eye diseases, glaucoma, uveitis, oculoplastics, facial cosmetics and aesthetics surgery, adult strabismus and paediatric ophthalmology. In Malaysia, ISEC has two ambulatory surgical centres located in KL and Penang. In Singapore, the group has an eye clinic in Mount Elizabeth Novena Hospital, as well as operations in Gleneagles Hospital. In a nutshell, the ophthalmology (eye anatomy) industry in a structural growth phase, underpinned by an ageing population, rising income levels and growing medical sector. Healthcare sector has been identified as a National Key Economic Area for Malaysia. Expenditure estimated to grow 7% CAGR from $12b in 2008 to $23.5b in 2018, supported by the ballooning sector expenditure in Singapore expected to reach $32.1b in 2018 from $8.1b in 2008 at a CAGR of 14.8%, buoyed by an ageing demographic. Risks include non-renewal of a service agreement with Parkway Hospitals (PHS) that expires Aug ’19 (accounted for 41%-50% of FY11-13 gross profit). Going forward, the group has earmarked $13.8m from the offer proceeds to expand operations into Asia Pac region - namely Indonesia, Myanmar, Philippines and Taiwan.