Thursday 4 December 2014

A "Healthy" Year Ahead?

Two companies related to healthcare industry are queuing to be listed next year.

  • Asian Healthcare Group (AHG) - listed as Special Purpose Acquisition Company (SPAC), targeting secondary & tertiary healthcare
  • Qualitas Healthcare Corp (QHC) - mainly targeting primary healthcare

AHG will offer 1.5 bil shares (80%) at 50sen each to the public out of its enlarged 1.875 bil shares, together with one free warrant for each share, with exercise price of 50sen.

It will raise RM750mil to acquire qualified medical center(s) or hospital(s) with 100-500 beds in Malaysia.

If AHG fails to acquire anything in 3 years after listed, it will be liquidated and investors will get back less than what they have invested earlier as money will be spent on various listing fees and administration expenses except for directors remuneration.

The eye-catching point in AHG's listing is about the names behind it.

The directorships of AHG are led by:
  • Datuk Yvonne Chia, Malaysia's first female commercial bank ex-CEO at RHB & HLB
  • Datuk Chevy Beh, ex-director at BP Healthcare Group
  • Tan Sri Dato Sri Abdul Aziz, director of Affin & Affin Islamic Bank
  • Mahadzir bin Azizan, director of Syarikat Takaful Malaysia & ECM Libra
  • Dato Voon Tin Yow, director of SP Setia
  • Jamaludin bin Elis
  • Dr Lawrence Chan Hon Wah, cardiologist

So many bankers, future money not a problem?

The warrants will raise another RM937.5mil if all are converted into AHG shares after successful acquisition of assets.

I think all the SPACs listed in Malaysia do not do so well. Is AHG worth to invest in?

Meanwhile, QHC also plans to list in the main board in 2015. The detail of the IPO is still pending.

QHC is mainly a primary care providers which is expanding fast recently through acquisition.

It started in 1997 by acquiring stakes in general practitioner (GP) clinics and medical imaging centers. It was listed in Catalist Board SGX-ST in 2008 but was taken private in 2011.

It is a regional player which has business in Malaysia, Singapore, India, Australia & New Zealand. 

The main services provided by QHC include primary care service, medical diagnostic service and dental service.

Currently in Malaysia it has:
  • 94 owned GPs
  • 23 affiliate GPs
  • 110 associate GPs
  • 4 dental clinics
  • 4 medical imaging centers
  • 1 pathology lab
  • 1 fertility center

QHC's financial report shows that its revenue doubles in 2 years from 2011 to 2013. However, net profit does not follow as expenses are growing at a higher rate.

Net profit actually fell from RM16.5mil in 2011 to RM14.1mil in 2013.

Anyway, gross profit is impressive at more than 50%.

Healthcare industry is considered as a relatively "safe" sector to invest in, as no matter how the market and economy behave, people are still getting sick.

Actually when the market is bad, more people will get sick isn't it?

With fast increasing medical insurance coverage, people tend to go to hospital more frequently, and doctors tend to do more tests on patients.

In the end, healthcare providers will earn more.

Nevertheless, healthcare is also a very competitive business. Those weak players will be eliminated sooner or later.

Perhaps more healthcare-related companies to be listed next year?


  1. Hi BD,

    Do u know any Singaporean bloggers which r as good as u and cold eyes?

    Since SG corporate culture is closed to MY, I wish to study stock picks from their articles.

    1. Hi, I rarely come across S'porean investment bloggers. May be you can look for it at i3investor Singapore market site.

      I'm actually not that good though I try to invest like cold eye :)

  2. Good share and good analysis