HC Surgical Post Result Announcement

HC Surgical has released its 1H FY2021 results on 13th January 2021. In this article, we will be looking at the highlights of their result announcement and the management outlook for the company.

About HC Surgical

HC Surgical Specialists Limited (“HCSS”) was incorporated on 1 September 2015 in Singapore and listed on the Catalist of the Singapore Exchange Securities Trading Limited on 3 November 2016.

HCSS and its subsidiaries is a medical services group primarily engaged in the provision of endoscopic procedures, including gastroscopies and colonoscopies and general surgery services with a focus on colorectal procedures across a network of 18 clinics located throughout Singapore.

1H FY2021 Result Highlights

HC Surgical’s revenue increased by 12.4% from S$9.77 million in HY2020 to S$10.98 million in HY2021 due to the pent-up demand for its services post-circuit breaker since 2 June 2020.

In addition, its profits attributable to shareholders surged 130.8% to S$5 million during the same period. This is mainly due to the S$1.54 million fair value gain versus the loss of S$0.6 million in the previous year as shown below:

(i) the increase in share price of Medinex Limited (“Medinex”) in which the Company holds a direct interest of 22.92% and a deemed interest of 9.50% and

(ii) the increase in fair value of investment in Singapore Paincare Holdings

As a result, its earnings per share jumped 129.0% year-on-year to 3.32 Singapore cents.

HC Surgical’s Dividend Analysis

HC Surgical’s dividends per share have been increasing from 1.8 Singapore cents in 2016 to 2.5 cents in 2019.

Commenting on the group’s HY2021 results, CEO Dr. Heah Sieu Min wants to ‘reward the shareholders for supporting the company during this tough period’ and plans to raise the interim dividend 30% to S$0.017 per share.

With that, the firm’s trailing 12 months dividends per share come up to S$0.024, which translates to a 6.85% dividend yield based on its 13th January closing price of S$0.35.

New Acquisition of subsidiary

On 1st January 2021, HC Surgical said that it will acquire the remaining 30 per cent stake of Julian Ong Endoscopy & Surgery (“JOES”). This is the medical practice helmed by Dr. Ong Kian Peng, Julian.

Investors should note that the Singapore Medical Council Disciplinary Tribunal is currently still investigating a complaint lodged against Dr Ong and the acquisition will be conditional upon the outcome of the investigation.

According to the press release, the purchase consideration purportedly also took into account the future potential of JOES, the synergistic benefits for the group, the results of Dr Ong's defamation suit against Serene Tiong, as well as the structure of the purchase consideration in tranches and the put options.

HC Surgical said the acquisition is in line with the group's long-term plans for growth, and that the working relationship between Dr Ong and the group will be enhanced. This will further improve the profitability of JOES, which will in turn also benefit the company.

Management Outlook

HC Surgical will commence operations at a new endoscopy centre in Toa Payoh during the second half of its financial year, after obtaining its medical license from the Ministry of Health (the “MOH”) in December 2020.

Although the COVID-19 pandemic has resulted in a drop in the number of foreign patients, the impact is mitigated by relying on the local population’s increased demand. The strategy of locating a wide network of centres within the heartlands has enabled the company to adapt to the “new norm”.

CEO Dr. Heah Sieu Min added, “The Group has always placed great emphasis on providing quality services for our patients. Our centres are MediSave accredited, enabling convenient payments including MediShield plan claims. Evening clinics are available for patients to visit after office hours. All 12 endoscopy centres are accessible via public transport.

Our team of dedicated doctors and staff are committed to provide the best medical care for our patients. We see our collaborations with insurance partners as an opportunity to serve a greater proportion of the community. It is in line with our motto to bringing ‘healthcare to your doorstep’.”

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