ISEC Healthcare

ISEC Healthcare: Delivered below par 4Q14 results, with net loss of $0.4m, reversing from the $0.4m net profit booked in 4Q13: +$0.3m). Excluding one-off listing fees of $1.4m, the group would have been profitable.

This brought FY14 earnings to $2m (-27%) on revenue of $22m (+26%). Stripping out listing fees, full year net profit would have risen by 25% to $3.4m, in tandem with the top line growth.

For the year, revenue was lifted by an upward revision on fees charged to patients, as well as increased patient visits in its Malaysia operations, which accounted for 92% of total turnover. This was partially mitigated by the depreciation of ringgit against SGD.

While gross margin improved 4.5 ppt to 43.5%, higher admin expenses (+77%) from listing ($1.4m) and additional headcount, set-up costs and rental of premises, took a toll on bottom line.

Balance sheet is debt-free, with cash pile of $27.3m mainly from IPO proceeds, earmarked for its expansion into the region- primarily Malaysia, Indonesia, Myanmar, Philippines and Taiwan.

The group declared first and final DPS of 0.11¢ (FY13: nil).

Demand and outlook for ophthalmology services will continue to be underpinned by the ageing population, increased awareness of eye disorders, rising income levels, increased uptake of private insurance and growth of medical tourism.

Maybank-KE has downgraded the stock to Hold rating with TP of $0.51, on the back of the 75% rally since listing (Oct '14). The house believes the current price may have factored in potential accretion from any M&A activity.

At the current price, ISEC is valued at 34x FY15 P/E and 4.9x P/B.