HEALTHCARE provider TMC Life Sciences Bhd (TMCLS) expects its fertility business to contribute up to 30% to its revenue for its year ending June 30, 2020 (FY20), from the current 17%.
Group CEO Wan Nadiah Wan Mohd Abdullah Yaakob said a greater contribution from the fertility business to the group’s overall growth is expected as the company’s expertise remains at the forefront of the fertility market.
“We have continuously seen growth in our fertility business. At the same time, we are building up our capacity for infertility treatment by expanding and upgrading our TMC Fertility Centre in Puchong.
“Upon its completion, which is expected to be around May this year, we can expect our fertility business to contribute more to both our revenue and net profit,” she said after TMCLS’ AGM in Petaling Jaya, Selangor, yesterday.
Wan Nadiah also highlighted that a stream of international patients from the group’s strongest markets — Indonesia and Singapore — are showing growth.
“The rising average age of new mothers is one of the key factors driving the demand for fertility clinics. The decreasing fertility in women and low sperm quality in men are also driving the market growth.
“New technology and techniques in the fertility treatment are also opening new opportunities with additional services for patients,” she added.
Under the recent Budget 2020, couples can withdraw from the Employment Provident Fund (EPF) to fund their in vitro fertilisation (IVF) treatments.
IVF procedures are also tax-deductible as medical expenses, so this, TMCLS said in its latest annual report, will provide many childless couples the opportunity to seek IVF treatments.
Hence, the group is expecting a 70:30 contribution between its hospital business and fertility business for FY20.
Beyond FY21, the group is expecting a net profit contribution of 60:40 between its hospital and fertility business.
For FY19, its hospital segment contributed 83% of revenue, with the rest coming from its fertility business.
TMCLS operates an integrated healthcare platform that owns a hospital division, TMC Fertility and TMC Care Pharmacy Sdn Bhd.
Its holding company, Thomson Medical Group Ltd, is listed in Singapore. Under the hospital division, it has a flagship hospital, Thomson Hospital Kota Damansara, formerly known as Tropicana Medical Centre.
Construction of another flagship hospital, Thomson Iskandar Medical Hub, is currently underway in the proposed Vantage Bay Healthcare City in Johor Baru which is located near the Johor-Singapore Causeway.
On the impact of the ongoing Covid-19 outbreak towards its operations, Wan Nadiah said there has been a decline in Chinese patients coming into its fertility clinics, however Malaysian and Indonesian patients have been making up the drop.
“Otherwise, the Covid-19 outbreak has positively impacted the company’s healthcare businesses as people’s awareness of life and health has been enhanced,” she added.
As for the group’s overall earnings, Wan Nadiah said the group expects earnings growth to be stable.
Group CFO Jimmy Wong expects the expansion of the Kota Damansara hospital and the development of its Iskandar Medical Hub to increase operating costs by 10% in FY21.
As for capital expenditure (capex), Wong said the group has earmarked RM183.7 million for its Kota Damansara hospital, Iskandar medical hub and its Puchong fertility centre until FY21.
Meanwhile, recurring income capex will be RM25.6 million.
For FY19 the group recorded a 15% year-on-year (YoY) growth in revenue to RM195 million, on the back of increased patient load and higher case intensity.
On a YoY basis, the group’s operational performance improved with increases in both outpatient (5%) and inpatient (7%) numbers in its Kota Damansara hospital.
TMCLS’ share price rose 4.9% to 64 sen yesterday, giving it a market capitalisation of RM1.1 billion.
In the past one year, stock declined 13% and the company’s dividend yield is 0.3% on a trailing 12-month basis.
Source: martinffwong.com
