SGX-listed Singapore Medical Group has entered into an agreement to acquire a paediatric clinic -- Babies and Children Specialist Clinic Pte. Ltd. -- located in Mount Alvernia Hospital for S$7.9 million.

Key points
• Latest acquisition adds third paediatric specialist to the Group, also bolsters depth to existing offering with sub-specialty focus on neonatology. 

• Earnings-accretive acquisition with compelling valuation of 7.6x PE multiple; net profit after tax for latest completed financial year was approx S$1.0 m. 

• Total consideration to be funded via issuance of 6,336,221 new shares at approximately S$0.62/share and approximately S$3.95 million cash over three tranches. 

• Momentum for organic growth revs up with four specialists joining the Group by 1Q2018 in the disciplines of Paediatrics, Obstetrics & Gynaecology, and Cardiology.

This expands the Group’s portfolio of clinics offering multi-disciplinary specialist healthcare services to 36.

This incudes two paediatric clinics located in the heartlands (Toa Payoh and Bishan).

The paediatrician from the clinic in Mount Alvernia Hospital brings on-board a subspecialty focus on neonatology that targets newborn infants, particularly the ill or premature.

The Group will also have a consultancy agreement of at least a five-year tenure with the renowned senior neonatologist where efforts would be committed to grow the Group’s paediatric practice, identify and mentor talented paediatricians.

drbengteckliang8.16"As part of our Group’s overarching growth strategy, we continue to set sights on inorganic and organic pursuits. Our track record of striking earnings accretive acquisitions has developed springboards for our organic growth in order to drive long-term earnings sustainability.”

-- Dr. Beng Teck Liang (photo),
Executive Director and CEO, 
Singapore Medical Group

The earnings-accretive acquisition is for a consideration of S$7.9 million, to be funded via the issuance of 6,336,221 new shares at S$0.62/share and S$3.95 million in cash over three tranches: S$1.4 million upon completion; S$1.4 million on the first anniversary of the completion date; S$1.1 million on the second anniversary of the completion date.

Based on the latest completed financial year, the clinic achieved net profit after tax of approximately S$1.0 million. As such, this acquisition was at an undemanding price-to-earnings multiple of 7.6.

Executive Director and CEO Dr. Beng Teck Liang said: “We are pleased to welcome our latest paediatrician who adds both breadth and depth to our existing specialty offering.

"Apart from expanding our footprint locally to have a presence at the hospital, neonatology is a subspecialty that would value-add our existing capabilities and propel us up the value chain. Shortly after initiating our entry into the paediatric discipline in April this year, we have rapidly grown to three paediatricians and will add a fourth specialist by 1Q2018.

Aside from paediatrics, Singapore Medical Group is growing in other disciplines:

Stock price  62.5c
52-week range 40c - 72.5c
Market cap S$282.5 m
PE (ttm) 38.3x
Dividend yield (ttm) --
Year to date return 44%
Source: Bloomberg
O&G: In the Women’s Health and Wellness segment, it will bring on-board a senior O&G specialist during the first quarter of next year to help charter synergistic growth.

Cardiology: In 1Q2018, it will welcome two cardiologists. 
With the addition of an interventionist and electrophysiologist, the Group is empowered to kickstart its  cardiology practice. 

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