Singapore O&G

Singapore O&G (SOG): CIMB today released an unrated report on SOG after doing a company visit.

As at end FY14, SOG has 7 physicians (6 O&G specialists and 1 breast surgeon) operating in 8 clinics, with 5% market share of private hospital births. Revenue contribution is fairly spread out; with no one doctor forming more than 40% of group revenue. Half of the group’s doctors have ‘spare capacity’ to take on more patients. Management also said there’s room for ASP upside as the group’s pricing is slightly below the median private O&G price.

Management also indicated that it plans to expand into complementary specialist services such as infertility and in vitro fertilization services. SOG is also looking to expand into paediatrics, which appears to be a natural fit where the group can leverage its existing O&G platform to drive patient flow.

SOG does not own any property and leases all its clinics. Margins are very stable at 37% over the past 3 years. Staff cost forms the biggest cost component (36% of sales in FY14, 56% of total FY14 expenses), and is likely to remain the case as SOG grows and engages more specialists.

The group does not have a fixed dividend policy, but targets 90% payout ratio.