Tmc Life Sciences Berhad

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

OTHERSTMC LIFE SCIENCES BERHAD ("TMCLS" OR "THE COMPANY") - LETTER OF INTENT ENTERED BETWEEN THOMSON HOSPITALS SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF TMCLS AND ONCOCARE MEDICAL PTE LTD

KUALA LUMPUR: TMC Life Sciences Bhd has issued a second show cause letter to Wan Nadiah Wan Mohd Abdullah Yaakob that contains allegations that are different from the first show cause letter.

OTHERSTMC Life Sciences Berhad ("the Company") - Suspension of Group Chief Executive Officer

$MFCB / 3069 (MEGA FIRST CORPORATION BERHAD) gutted to have missed moderating this but BIG UP @terence775 who did a fantastic job!

Slide #4 is the most important where the biggest earnings increment will come from, and I think the market is still not paying attention.

Potential move into healthcare in Setia Alam is also interesting. Could have an impact like one $TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) had in Kota Damansara.

OTHERSTMC LIFE SCIENCES BERHAD ("TMCLS" OR "THE COMPANY") - LETTER OF INTENT ENTERED BETWEEN THOMSON HOSPITALS SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF TMCLS AND ONCOCARE MEDICAL PTE LTD

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Good prelim research into the company, if not mistaken $TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) also has a growing business segment dealing with fertility care.

@Aquilas also recently shared that they received the green light to list in the ACE Market, so we can expect that they will launch their IPO this year 😁

PETALING JAYA: TMC Life Sciences Bhd has clarified that it had suspended its group chief executive officer (GCEO), Wan Nadiah Wan Mohd Abdullah Yaakob, to facilitate an internal disciplinary process.

SUSPENSION OF GROUP CHIEF EXECUTIVE OFFICER

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD)

PETALING JAYA: TMC Life Sciences Bhd has appointed director Dr Melvin Heng Jun Li as its group chief executive officer (GCEO) with immediate effect, following the suspension of Wan Nadiah Wan Mohd Abdullah Yaakob.

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) suspends GCEO, reason not provided.

Uh-oh, not a good sign. Strictly speaking, business is said to continue as usual and definitely the hospitals will continue... but suspension of top management is usually a bad sign.

PETALING JAYA: TMC Life Sciences Bhd has appointed director Dr Melvin Heng Jun Li as its group chief executive officer (GCEO) with immediate effect, following the suspension of Wan Nadiah Wan Mohd Abdullah Yaakob.

OTHERSTMC Life Sciences Berhad ("the Company") - Suspension of Group Chief Executive Officer

Change in Boardroom - DR HENG JUN LI MELVIN

@portoftheyear

$SASBADI / 5252 (SASBADI HOLDINGS BERHAD) 40%
$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) 20%
$DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD) 40%

@portoftheyear 2024

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) 25%
SMETRIC 25%
$MSM / 5202 (MSM MALAYSIA HOLDINGS BERHAD) 25%
$CRESNDO / 6718 (CRESCENDO CORPORATION BERHAD) 25%

@portoftheyear

PORTFOLIO OF THE YEAR 2024

$AWANTEC / 5204 (AWANBIRU TECHNOLOGY BERHAD) - 40%
$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) - 10%
$MERSEC / 0285 (MERCURY SECURITIES GROUP BERHAD) - 10%
$KLSE-ARTRONIQ - 30%
$AME / 5293 (AME ELITE CONSORTIUM BERHAD) - 10%

@portoftheye

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD) 25%
$SCOMNET / 0001 (SUPERCOMNET TECHNOLOGIES BERHAD) 25%
$OPTIMAX / 0222 (OPTIMAX HOLDINGS BERHAD) 25%
$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) 25%

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) continued trajectory of improving numbers

They just announced their Q1 results, and for people following the company I think it's not surprising at all. Short and simple, let's just go through it.

1. Cash flow is great, with NOCF at RM 22mil this quarter. Acquisition of PPE is around RM 4mil. As mentioned before, TMCLIFE is likely to be done with their near term major capex cycle (expanding of THKD), and we are probably going to see 1-2 years of good FCF before the next major spend for Thomson Iskandar.

2. TMCLIFE experienced both increasing revenue, profit, and profit margin compared to a year ago. This is alluded to the increase in the capacity of THKD as well as recovery of their fertility business. Personally, a sign that a business is doing well, to me, is that both the revenue and margin can increase at the same time. So that's good.

3. Hospital contributed RM 81.8mil while Fertility was RM 10.1mil, both improved QoQ and YoY. There should still be quite some runway for their fertility business to improve. Meanwhile, I also expect THKD to continue to be resilient and ongoing opening of new capacities progressively until 2025, with another ~40+% new beds in the pipeline over the next 1-2 years.

4. They expect the continued expansion in capacity at THKD, recovering fertility business, and the improvement of medical tourism to benefit them.


***

Personal thoughts: The growth path continues, and so far, so good it seems. Market seems to have reacted a little bit.

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD)

Quarterly rpt on consolidated results for the financial period ended 30/09/2023

Hospital Acquisitions, and how do other listed healthcare centers compare?

1. Ramsay-Sime Darby sells off RSDH for RM 5.7b, and will recognize a gain of approximately RM 2b (approx 30 sen per share). For investors of $SIME / 4197 (SIME DARBY BERHAD) , take note of the incoming special one off gain on disposal (maybe around 2Q24, pending completion of the disposal).

2. This will help Sime Darby cope with their acquisition of UMW, providing ample cash to fund the purchase without getting overlevered. Today, UMW share price hits RM 4.9, which matched my GTD order at 4.89 haha. Market seems to have improved confidence on the takeover, and I get to realize my arbitrage earlier than expected. For details of the acquisition, you may read further here: https://cutt.ly/kwYRnQc5

3. The RSDH sale was valued using the EV/EBITDA method, at approx 20x. Just for info, that the audited PBIT of RSDH in FY23 was RM 114mil-- assuming standard 25% corp tax implies PAT of ~RM 86mil... so using the PE method puts it around ***PE 66x***... and that doesn't consider finance costs yet, which could pump it to nearly PE 70x. Even assuming the share of profit is the final PAT of the hospital, puts the PE at around PE 50x. A very good deal, in my opinion, and no wonder sime said it was too good to refuse.

4. How are the other hospital companies valued by the market?

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD)
-EV/EBITDA : 16.5x
-PE 27x

$KPJ / 5878 (KPJ HEALTHCARE BERHAD)
-EV/EBITDA : 13.6x
-PE 25.7x

$IHH / 5225 (IHH HEALTHCARE BERHAD)
- EV/EBITDA : 15.7x
- PE 24.4x
(*** It's important to note of the 1 off gains in IHH's numbers of around RM 1bil profit, I couldn't be bothered to work it out but the valuation definitely much higher than these numbers)

***

Could the hospital M&A scene start picking up?

Change in Principal Officer - MR WONG YU CHEE

Change in Boardroom - MR KAN KHEONG NG

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) AGM Notes

1. Thomson Iskandar location is around 1km from SG-JB border. Target operational by 2030 because they are not just building the hospital, but even the utility infrastructure there.
3. Aim to increase growth in returns to shareholders.
4. Expand Ambulatory Care services across Malaysia.

5. Strategies for handling brain drain issue:
- work with universities, sponsor students, hire graduates
- performance based remuneration
- competitive packages, and allow their doctors to have 2 sessions a week in other hospitals (synergistic, as the Drs can refer cases back to THKD too)

6. Inflationary costs?
- Generally utilities costs are all up but margins are still maintaining in spite of higher staff costs. Depreciation of the new wing has started impacting the P&L. Staff costs target to be below 30% of revenue. Currently around ~27%. Going to double up the number of doctors by 2025... need to find more nurses. 4 nurses to 1 bed.

7. Done a number of first time surgeries/procedures in Malaysia/asia pacific. Abbott automation, 100% automated, no personnel intervention needed in handling the vials and test tubes. Focusing on women and paeds care.

8. Foreign to local patients: currently around 30% foreign, 70% local generally. In line with rest of market in Selangor area. Penang has more foreign patients, however very saturated in Penang already.

9. Current bed utilization is around ~66%. Looking to expand to 500 beds by 2025. Current number of beds with license is ~350.

10. Why opening of bed seems slowed down?
Not all beds are the same, the recent ones are HDU (something like more complex and critical cases). In general, still on track to meet target of 500 beds by 2025. Every time utilization reaches around ~65%, then new beds will be opened progressively. No point opening straightaway to 500 in one shot.

11. Thomson Iskandar expected operational by 2030. Focusing on THKD first, still have a parcel of land for next phase of expansion here before needing Thomson Iskandar.

12. TMC Fertility is expecting strong growth.


***

It was an interesting AGM, because outside the venue they provided free basic health screening and showcased some of their products from the various business segments, which is always nice to see. For better or worse, I found out that I've definitely become "unfit" after starting work and leaving uni 😂

They provided lunch but unfortunately seems like nobody knew about it as it wasn't announced or mentioned, so it's sad that very likely a lot of the food will simply be wasted. I'm a big opponent against food waste, so it would be good if they either simply didn't provide it, or make clear what they are going to give. It's a small pet peeve, that's all.

@tapdance @realalvinang @boncos @zhexiangxd @jay888 @MICHAELWILBERT1 @Travellingme @elenov

General Meetings: Outcome of Meeting

$TMCLIFE / 0101 (TMC LIFE SCIENCES BERHAD) – Award Winning Healthcare Provider, Malaysian Book of Records holder, and one of the leading Fertility centres in SEA with Just-Completed Expansion and seeing Stronger Numbers being Reported

Preamble:
I guess most people would have heard of TMCLIFE already in some way or another. In Malaysia, TMCLIFE is a 70% owned subsidiary of Thomson Medical in Singapore via Sasteria Pte Ltd. and they operate Thomson Hospital in Kota Damansara (THKD) as well as a number of fertility clinics around Selangor, Penang, Ipoh and JB. THKD was in operation since 2008, and they have been growing over time. Most recently, they did a major expansion by increasing the capacity by around 50%, from ~200beds in 2022 to 314 beds now (I believe it was completed sometime around April 23’). As usual with most expansions, the numbers generally take time to come after “commissioning” due to various real world issues including demand catch up, teething issues, onboarding personnel, etc. THKD is still in the midst of expansion, with their end goal being ~500+ beds at THKD and the new Thomson Iskandar Medical Hub in Johor Bahru “within 12-24 months after the Rapid Transit System at Bukit Chagar is fully operational”. The land is already there at Vantage Bay, and I understand approvals have already been gotten. However, while preliminary construction has started, construction proper has yet to begin. It is proposed to be of similar size to THKD sporting ~500beds at max capacity however it seems to be a story of 2027- and beyond, which may not necessarily be a bad thing.

Anyway, as pointed out by @boncos here: https://cutt.ly/SwEBVPxX , the numbers have indeed started to flow in however the share price has yet to particularly move much. This could be due to any number of reasons such as the macro environment investors find themselves in amongst other things.
For now, they had just released their Annual Report, so let’s go through some interesting points I found.

*written by terence775, purely for sharing purposes and not to be taken as investment advice in any way*

TMCLIFE AR 2023:
1. Straightaway, they don’t hesitate to tell you how many “firsts” THKD has.
a. First Private Hospital in Malaysia to implement Abbott’s AlinIQ AMS for automation in laboratories. According to Abbott’s website, their AMS system helps improve turnaround time of analytics by about 60%. This is expected to improve productivity, accuracy, versatility and uptime of their lab operations.
b. In the scene of Oncology and Nuclear Medicine, TMCLIFE houses the first Tri-modality nuclear medicine imaging equipment in ASIAPAC.
c. They are also the first hospital in Malaysia to be accredited for its Core and Ambulatory – Cancer Services under EQuIP7 from Australia (ACHS) International.
d. First in Malaysia to offer ENT, Head and Neck CO2 laser treatment, and one of four private hospitals in Malaysia to offer IV Neuroradiology services.
e. THKD also recorded their first Kasai surgery and first Thymoma surgery this year, after expanding their services to include palliative care, ophthalmology, and vitreoretinal, rheymatology, paediatric anesthesiology and vascular surgery.

2. They also have been awarded a bunch of titles such as:
a. Specialist Hospital of the Year ASIAPAC
b. Advanced Paeds Service Provider of the Year ASIAPAC
c. Allied Health Initiative of the Year – Malaysia
d. Innovative Technology in Healthcare Sector for Fertility Treatments in ASEAN
e. Gastroenterology Service Provider of the Year ASIAPAC

3. TMC Fertility runs one of the largest IVF labs in SEA, and one of the first in MY to be certified by RTAC, Australia.

4. TMC Fertility is also the Malaysian Book of Records holder for Highest Number of IVF Babies produced by a single IVF practice.

5. TMC Care, their pharmacy arm, operates a retail outlet as well as an online store.

6. They also have Thomson Traditional Chinese Medicine (TCM), which operates both physically as a clinic, as well as online. This TCM segment has won the TCM Center of the Year ASIAPAC awards for 2022 and 2023 respectively.

7. Due to deferred tax credits, net profit for 2023 declined 5% compared to 2022. Operationally speaking, their net profit would have increased by 36% excluding the deferred tax credits.

8. CAPEX allocation is RM 21.8mil, of which RM 13.8mil is for expansion. It seems like the major CAPEX cycle has ended for now, after spending more than RM 250mil in CAPEX in the past few years.

9. Another Malaysian Book of Records entry—First Hospital Alliance with Tertiary Educational Institution. This aims to improve the healthcare landscape by having cooperation with universities. At the same time, they could potentially attracted top talents to work for them.

10. THKD plans to continue to focus on their niche as a children and women healthcare hub.

11. An interesting business model is their collaboration on the medical tourism front, whereby they partner up with travel and tour agencies to offer holiday and retreat packages while receiving treatment at TMC Fertility via Medical Referral Agents. This targets international customers which bodes well as these groups of people tend to have more to spend…

12. Looking at the shareholder list, we can see that TMCLIFE has very low float, with the top 3 holding 84.35% and the top 10 holding 89.63% of the company. Major shareholders are Sasteria (M) Pte Ltd, which is a subsidiary of Thomson medical Singapore; and as pointed out by @realalvinang, the Duli Yang Amat Mulia Tunku Ismail Ibni Sultan Ibrahim of Johor holds 7.64%. UOBKH nominees (asing) holds 6.58%. This is a consolidated nominee holdings through UOBKH, and probably their Singapore clients so it’s likely not to be a singular entity.

13. Other interesting names on the top 10 are Credit Suisse AG (their numbers have been up and down over the years), Lembaga Tabung Amanah Warisan Negeri Terengganu (have been increasing over the few years), Philip Capital (new top 10).

Financials:
Revenue and PBT have been growing steadily over the past 10 years, with revenue and PBT CAGR of 15.3% and 22.2% over 10 years. This is definitely commendable. They have also been paying dividends, albeit with a low-ish payout ratio of around <15%, but nevertheless in line with the growing profits, the dividend paid out have also increased by 9.4% CAGR over the past 10 years.

Balance sheet is healthy with minor net debt position, bulk of it non-current. I don’t expect them to run into any liquidity crises or have any need to raise funds from the market.

Thought on future Dividends:
Recently, they have declared a special dividend and also their highest payout yet at 0.84sen (pending approval at the AGM on Thursday!), which is equal to a payout ratio of around ~37%. This comes after huge CAPEX spending over the past 3 years for expansion. With major CAPEX already having been spent, I think we are set for a few years of higher payouts before the next expansion cycle (probably for Thomson Iskandar).


Valuation:
Hospitals and healthcare related counters are generally always at a premium; and TMCLIFE has a TTM PE of ~26x while their RoE is only 4.6%. That being said, I’ve explained before about business cycles and financial valuation, so it’s good to draw your own estimations based on your own projections. I believe stronger numbers are incoming; but you will have to do your due diligence for that.

Competitors and Peers
Hospitals and Medical Centres: IHH, KPJ, CENGILD, LYC

The other hospital players are all more or less having around the same kind of premium as TMC, with the exception of LYC, focusing on confinement and postnatal care, being continually loss making for years. KPJ and IHH are both much larger than TMCLIFE. IHH has added risk of geopolitics with exposure in Turkiye, India, Europe, China and so on.

Closing thoughts:
Looking at their direct competitors, most of them are expanding too. Does this make the hospital industry a saturated one? Will there be more supply than demand? Well, judging from the number of beds compared to the population as a whole, Malaysia is still quite within the average range with ~1.8 beds per 1000 people. There are plenty of countries with higher number of beds per 1k people than us, whether with higher per capita GDP or lower. This makes me think that the industry is still quite within equilibrium and, especially for TMCLIFE which operates in the more upmarket segment, can probably maintain their pricing power and margins.

Whilst the world is threading on unsteady ground, healthcare will always play an important role and shouldn’t lack demand. We shall see how the numbers continue to flow in in the coming months.

tagging people who might be interested in TMCLIFE
@tapdance @realalvinang @boncos @zhexiangxd @jay888 @MICHAELWILBERT1 @Travellingme @elenov

WINDING UP / RECEIVER & MANAGER / RESTRAINING ORDER / SPECIAL ADMINISTRATORTMC LIFE SCIENCES BERHAD ("TMCLS" OR "THE COMPANY") - DISSOLUTION OF WHOLLY-OWNED SUBSIDIARY, TMC BIOTECH SDN. BHD. (IN LIQUIDATION) ("TMCB")