! Ticker: SGX:1D8 Industry: Healthcare Business Overview Singapore O&G Ltd. (SOG), headquartered in Singapore, is an investment holding company engaged in the provision of specialist medical services to women & children. Their business segments include Obstetrics & Gynaecology (O&G), Cancer-related, Dermatology, and Paediatrics. ! Source: Annual Report 2018 In 2018, the largest contribution to revenue is O&G, followed by Dermatology, Cancer-related and Paediatrics. Group Structure ! Source: Annual Report 2018 - The O&G segment includes general obstetrics, labour and delivery, general gynaecology and surgery, female pelvic medicine, urogynaecology and reconstructive surgery. - The Cancer-related segment includes gynae-oncology, breast and general surgey. - The Dermatology segment relates to aesthetic dermatological procedures, dermatologic and laser surgery, and general skin care. - The Paediatrics segment includes childhood immunization, child nutrition, growth and developmental assessment. SWOT Analysis On strengths, Singapore O&G has a well-established team of doctors that are experienced in women’s and children’s healthcare. The company has also been able to capture growing market share within the private live birth sector. Their clinics are also conveniently located in the Central and East regions of Singapore. Being one of the first few in Singapore to successfully perform the High Intensity Focused Ultrasound procedure last year, they are also forward-looking. On weaknesses, their business is not diversified geographically as they operate only in Singapore. This may expose them to social, economic and political threats here. On opportunities, the increasing number of cancer cases, especially breast cancer being the top cancer that affects women, will serve as a strong driver of growth in the near future. On the back of Singapore’s ageing population, it presents opportunities that O&G can tap on to address healthcare needs of elderly women. On threats, there are competitors that have a huge market share e.g. Raffles Medical Group. Their O&G segment will also be affected by the decreasing fertility rate in Singapore. Share Price Performance ! Source: TradingView For the last year, the share price of SOG increased by 14.93%. Over the last 5 years, SOG’s stock price has been outperforming the STI. Financials ! Singapore O&G’s revenue grew by 16.0% in 2018, driven by the O&G, cancer-related and paediatrics segments. Net profit saw an increase of 7.5%. If a one-off goodwill impairment and non-recurring income were to be excluded, net profit would have increased by 29.4% to $11.0m. The one-off goodwill impairment of $2.8m was due to the excess of carrying amount of cash generating unit for Dermatology segment, and non-recurring income of $1.1m arose from the settlement of a dispute. Current assets increased 27.4% mainly due to an increase in inventories, trade and other receivables, and cash and cash equivalents. On the other hand, current liabilities rose 26.9% because of an increase in trade and other payables. Piotroski F-Score For my analysis, I will be using the Piotroski F-Score. It assigns a number between 0-9 which is used to determine the strength of a company’s financial position. Comparing 2018 vs 2017, the criteria awarded with a point (1) means there was an improvement from the previous year and vice-versa (0). ! Singapore O&G was awarded a score of 8, which is good. Current ratio rose from 3.72 to 3.74, meaning they are in a much better position to pay off their debt obligations. The company’s return on assets and asset turnover ratio also increased, indicating that they have become more efficient at using their assets to generate earnings and revenue respectively. On the other hand, gross margin ratio dropped from 0.35 to 0.33. Valuation ! From the above figures, Singapore O&G is slightly undervalued. Even though P/B, P/E and P/S ratio seem high, they are in fact lower than the industry average. They have also had consistently strong returns on capital, with the returns being higher than the industry average. Conclusion With the above analysis, the shares of Singapore O&G seem promising. The company has strong fundamentals of high profit margins, operating cashflows and no debt. They are also always seeking to hire the best medical professionals and are forward-looking. This economic moat will provide them with an edge over their competitors and place them in good stead for the long-term. Perhaps, management should also consider diversifying revenue stream out of Singapore through acquisitions or organic growth, and increase their number of key medical professionals as revenue and business development is very dependent on them.