facebook(Stocks Discussion) SGX: Alliance Healthcare Group Ltd? - Seedly

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Anonymous

07 Jun 2019

Stocks

(Stocks Discussion) SGX: Alliance Healthcare Group Ltd?

Discuss anything about Alliance Healthcare Group Ltd share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment!

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Discussion (5)

What are your thoughts?

IPO of Alliance Healthcare Group Ltd is closing subscription on 29 May 2019, 12.00pm. Will you subscribe to their shares? Give your thoughts below!

Key summary

  • Share price: $0.20 per share
  • IPO closing: 29 May 2019, 12.00pm
  • Issuing 32 million shares (1m public offer + 31m placement shares)

Business Overview

4 key business segments:

  1. Managed healthcare solutions (focused on providing solutions for outpatient healthcare and treatments at private hospitals)
  2. GP clinic services (17 GP clinics across Singapore)
  3. Specialist care services (5 specialist clinics)
  4. Pharmaceutical services (sell and market pharmaceutical products to hospitals, pharmacies and clinics in Singapore and some Asian and European countries)

Financials

Revenue and profit increased since 2016. Healthy growth.

Managed Healthcare Solutions accounts for 14.5% of revenue but a large percentage, 39.5% of profit

Number of shares before: 175,888,352

Number of shares after completion of the invitation: 207,888,352

Dividends

Board intends to recommend and distribute dividends of at least 30% of their net profit after tax for FY2020 and for FY2021. However, note that foregoing statements are merely statements of AHG’s present intention and shall not constitute legally binding obligations. (This means there is no guarantee of dividends!)

Group Structure

Revenue Portfolio

GP clinics: biggest revenue generator

Based on AHG, if clinic is:

  • < 2 years: (GP clinics in new housing estates) increases at a slower rate. Takes time to acquire its initial patient base and new housing estates require time to be fully populated.
  • 2-6 years: highest growth rates as this age profile reflects the phase of patient acquisition and increasing population as the housing estates mature.
  • 6 years: slowest growth rates or may even decline due to the matured profile of the housing estates. Revenue may also be adversely affected when patients change their residency away from matured housing estates. (But if they have a large patient base that is already stable, slow growth rates doesn’t affect that much)

What are they going to do with the proceeds from this IPO?

  • Expand our Group’s business through (i) the expansion of our network of self-owned GP clinics, specialist care services and medical facilities in Singapore as well as (ii) acquisitions, joint ventures and/or strategic alliances (47% or $3mil)
  • Invest in technology systems as part of the digital transformation of the delivery of healthcare services (8% or $0.5mil)
  • Expand our pharmaceutical services business (3% or $0.2mil)
  • For general working capital requirements (13% or $0.8mil)
  • For payment of underwriting and placement commissions as well as listing expenses (29% or $1.9mil)

Business Strategy

Risks

  • Subject to government laws and regulations
  • Dependent on key relationships with insurance companies for patient volume
  • May not be able to sustain past growth rates

Opportunities

  • Escalating costs of private healthcare
  • Ageing population driving up demand for healthcare
  • Economic Growth and Rising Income Levels Will Help Increase Healthcare Spending
  • Increasing Population of Foreigners in Singapore
  • Government going towards making Singapore a MedTech Hub

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Probably pass due to the red flags and current market emotions being low.

Majority of market share is in Singapore, which means competition would be intense. The consolation point would be that they have tried to expand overseas, which leads to the next point.

If you look at the revenue portfolio from 3M18 vs 3M19, it seems to revert back to SG market, rather than expansion. If you look at the FYs, it seems like expansion from FY 16 to 17, but slight consolidation from FY17 to 18, with the “loss” of Thailand market, while HK has reduced. Interestingly, other market have increased. However, if you look at 3M18 VS 3M19, other market share has actually reduced from 10.1 to 3.1

Not sure if SGD appreciated significantly against others or is it due to change in market shares.

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Gabriel Tham

Gabriel Tham

07 Jun 2019

Level 14·Tag Team Member at Kenichi Tag Team

Mr IPO give 1 chilli rating means NO GOOD! Not subscribing!

[https://singapore-ipos.blogspot.com/...

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