Healthway Medical Corporation

Business Times - 04 Jun 2011

Healthway opens Japanese medical centre in Orchard

By NISHA RAMCHANDANI

HEALTHWAY Medical Corporation has opened its new Healthway Japanese Medical Centre (HJMC) at TripleOne Somerset, making it the first of its medical centres established to cater to Singapore's Japanese community.

Healthway operates private medical centres and clinics offering primary care, dental and specialist services. It also operates a hospital as well as medical and dental centres in China.

For the new medical centre at TripleOne Somerset, Healthway has established a Japanese team of doctors, a dentist, a pharmacist, nurses and other support staff. The group also highlighted in a press release to the Singapore Exchange (SGX) yesterday that the new centre's location in Orchard Road would enable it to treat its Japanese patients in a 'familiar environment that they are accustomed to'.

With the centre operating in TripleOne Somerset, where the group has a strong presence, its patients will have access to a range of services from the group's various specialist, dental, health screening and aesthetic clinics in the same building.

'This medical centre was set up in recognition of the unique opportunities and requirements in serving the healthcare and dental needs of Japanese expatriates and tourists in Singapore,' said Lam Pin Woon, president and executive director of Healthway. 'The opening of HJMC further enhances our determination to fulfil the group's vision of providing better care to a wide spectrum of the community.'

Healthway shares closed one cent up at 10 cents yesterday.

Healthway medical is trading at a much lower PE than Q&M Dental. Also tradin gbelow NAV. I have no idea why Healthway is still 9.1cents. Should be at least 11cents! Thinking of vesting some later!

(22-02-2012, 07:07 PM)Behappyalways Wrote: Most of their assets are intangible assets and they have a legal action pending. The legal suit might hit their bottom line.

The legal suit is a non event, assets mainly comprise of medicinal stocks and cash. The World Bank has a 5.4% stake in Healthway Medical Group.

Sounds good to me!

(23-02-2012, 03:38 PM)propertyinvestor Wrote:

(22-02-2012, 07:07 PM)Behappyalways Wrote: Most of their assets are intangible assets and they have a legal action pending. The legal suit might hit their bottom line.

The legal suit is a non event, assets mainly comprise of medicinal stocks and cash. The World Bank has a 5.4% stake in Healthway Medical Group.

Sounds good to me!

From their latest Q311 Balance Sheet under Non-Current Assets,

Intangible assets = $177,743,000

If you compare with Raffles Medical (which is ~3.5x larger in terms of Revenue), it's a lot lower at $316,000. I wonder what's in that intangibles (Goodwill or Brand name) that's so much larger than RafflesMed.

The other thing about Healthway when I look at their financials from FY09 onwards, they seem to be 'downsizing' ie. Revenue is declining.

Lastly, their NPM was a respectable 15.5% in FY09 but dropped to 2.9% in FY10 (due to downsizing?). For FY11, it'll likely be aro' 6%. I wonder why it's so erratic as I'd vested in Thomson and RafflesMed. Perhaps the difference is in having a Hospital?

(23-02-2012, 11:09 PM)KopiKat Wrote:

(23-02-2012, 03:38 PM)propertyinvestor Wrote:

(22-02-2012, 07:07 PM)Behappyalways Wrote: Most of their assets are intangible assets and they have a legal action pending. The legal suit might hit their bottom line.

The legal suit is a non event, assets mainly comprise of medicinal stocks and cash. The World Bank has a 5.4% stake in Healthway Medical Group.

Sounds good to me!

From their latest Q311 Balance Sheet under Non-Current Assets,

Intangible assets = $177,743,000

If you compare with Raffles Medical (which is ~3.5x larger in terms of Revenue), it's a lot lower at $316,000. I wonder what's in that intangibles (Goodwill or Brand name) that's so much larger than RafflesMed.

The other thing about Healthway when I look at their financials from FY09 onwards, they seem to be 'downsizing' ie. Revenue is declining.

Lastly, their NPM was a respectable 15.5% in FY09 but dropped to 2.9% in FY10 (due to downsizing?). For FY11, it'll likely be aro' 6%. I wonder why it's so erratic as I'd vested in Thomson and RafflesMed. Perhaps the difference is in having a Hospital?

They embarked on an expansion drive in Shanghai during FY 2010

You can find more info here

http://www.healthwaychina.com/En/about.a...=Healthway Dental Center

And yes, they are building a hospital in JB which is targetted to be ready in 2015. Its structured under Healthway Development.

(24-02-2012, 10:05 AM)propertyinvestor Wrote:

(23-02-2012, 11:09 PM)KopiKat Wrote:

(23-02-2012, 03:38 PM)propertyinvestor Wrote:

(22-02-2012, 07:07 PM)Behappyalways Wrote: Most of their assets are intangible assets and they have a legal action pending. The legal suit might hit their bottom line.

The legal suit is a non event, assets mainly comprise of medicinal stocks and cash. The World Bank has a 5.4% stake in Healthway Medical Group.

Sounds good to me!

From their latest Q311 Balance Sheet under Non-Current Assets,

Intangible assets = $177,743,000

If you compare with Raffles Medical (which is ~3.5x larger in terms of Revenue), it's a lot lower at $316,000. I wonder what's in that intangibles (Goodwill or Brand name) that's so much larger than RafflesMed.

The other thing about Healthway when I look at their financials from FY09 onwards, they seem to be 'downsizing' ie. Revenue is declining.

Lastly, their NPM was a respectable 15.5% in FY09 but dropped to 2.9% in FY10 (due to downsizing?). For FY11, it'll likely be aro' 6%. I wonder why it's so erratic as I'd vested in Thomson and RafflesMed. Perhaps the difference is in having a Hospital?

They embarked on an expansion drive in Shanghai during FY 2010

You can find more info here

http://www.healthwaychina.com/En/about.a...=Healthway Dental Center

And yes, they are building a hospital in JB which is targetted to be ready in 2015. Its structured under Healthway Development.

Expansion drive but revenue declines, interesting. But, one of the quarterly report did mention they were closing down unprofitable clinics (that's why I used the term 'downsizing').

Intangible Assets was already at this high level even for FY08, so, nothing to do with their FY10 expansion drive. From their FY11 AR (pg62), the break down is (mainly from Goodwill - see pg60),

Family medicine (comprising up to 58 clinics) $49,313,000
Dentistry (comprising up to 9 clinics) $7,191,000
Paediatrics (comprising up to 11 clinics) $70,417,000
Orthopaedics (comprising up to 6 clinics) $44,853,000
Wellness and aesthetic (comprising up to 3 clinics) $4,657,000
Total = $176,431,000

For a non-financial person, I did thought the Goodwill may have come from paying a premium when they acquired clinics, so if that's the case, they ought to deduct the Goodwill when they close them down or sell them off. But, their explanation (pg62) on Goodwill is too 'cheem' for me to understand. So, I'm going to stop looking at this company as it's giving me a headache!

(24-02-2012, 10:45 PM)KopiKat Wrote:

(24-02-2012, 10:05 AM)propertyinvestor Wrote:

(23-02-2012, 11:09 PM)KopiKat Wrote:

(23-02-2012, 03:38 PM)propertyinvestor Wrote:

(22-02-2012, 07:07 PM)Behappyalways Wrote: Most of their assets are intangible assets and they have a legal action pending. The legal suit might hit their bottom line.

The legal suit is a non event, assets mainly comprise of medicinal stocks and cash. The World Bank has a 5.4% stake in Healthway Medical Group.

Sounds good to me!

From their latest Q311 Balance Sheet under Non-Current Assets,

Intangible assets = $177,743,000

If you compare with Raffles Medical (which is ~3.5x larger in terms of Revenue), it's a lot lower at $316,000. I wonder what's in that intangibles (Goodwill or Brand name) that's so much larger than RafflesMed.

The other thing about Healthway when I look at their financials from FY09 onwards, they seem to be 'downsizing' ie. Revenue is declining.

Lastly, their NPM was a respectable 15.5% in FY09 but dropped to 2.9% in FY10 (due to downsizing?). For FY11, it'll likely be aro' 6%. I wonder why it's so erratic as I'd vested in Thomson and RafflesMed. Perhaps the difference is in having a Hospital?

They embarked on an expansion drive in Shanghai during FY 2010

You can find more info here

http://www.healthwaychina.com/En/about.a...=Healthway Dental Center

And yes, they are building a hospital in JB which is targetted to be ready in 2015. Its structured under Healthway Development.

Expansion drive but revenue declines, interesting. But, one of the quarterly report did mention they were closing down unprofitable clinics (that's why I used the term 'downsizing').

Intangible Assets was already at this high level even for FY08, so, nothing to do with their FY10 expansion drive. From their FY11 AR (pg62), the break down is (mainly from Goodwill - see pg60),

Family medicine (comprising up to 58 clinics) $49,313,000
Dentistry (comprising up to 9 clinics) $7,191,000
Paediatrics (comprising up to 11 clinics) $70,417,000
Orthopaedics (comprising up to 6 clinics) $44,853,000
Wellness and aesthetic (comprising up to 3 clinics) $4,657,000
Total = $176,431,000

For a non-financial person, I did thought the Goodwill may have come from paying a premium when they acquired clinics, so if that's the case, they ought to deduct the Goodwill when they close them down or sell them off. But, their explanation (pg62) on Goodwill is too 'cheem' for me to understand. So, I'm going to stop looking at this company as it's giving me a headache!

Ive checked that Q&M Dental also uses the same method in measuring and calculating goodwill. Basically, it measures the ability of the said Department to generate revenue and recurring income. The projected income is then discounted at an appropriate discount rate, (In Healthway's case, its 7%) to arrive at a value.

There was no impairment to this goodwill last year, so its safe to assume that the revenue projection used by management in calculating goodwill for their 5 year projection is accurate to date

(25-02-2012, 02:01 PM)propertyinvestor Wrote: Ive checked that Q&M Dental also uses the same method in measuring and calculating goodwill. Basically, it measures the ability of the said Department to generate revenue and recurring income. The projected income is then discounted at an appropriate discount rate, (In Healthway's case, its 7%) to arrive at a value.

There was no impairment to this goodwill last year, so its safe to assume that the revenue projection used by management in calculating goodwill for their 5 year projection is accurate to date

I went to check Q&M Dental financials. Their Intangible Assets = $341,000. Not such a huge figure, unlike Healthway = $177,743,000 ie. 500x. I went to look at both their IPO prospectus. For Healthway, without this huge Intangible Asset, their Total Liabilities would have been more than their Total Assets. As for Q&M, no Intangible Asset during IPO, only appeared from FY10. I also went to look at Thomson Medical IPO Prospectus, also no Intangible Assets.

This brings us back to the original point raised by 'Behappyalways' ie. Most of their assets are in Intangible Assets. I had also gone to look further and don't see this kind of huge figures in other Medical stocks such as Raffles Medical, Thomson Medical and now Q&M Dental. I'm going to stop looking further, my headache is getting worse..

Note that the Founder Medical Director has left the company 1- 2 years ago.
China is a highly risky bet for a medical/healthcare company. One very big GP practice I knew some years ago went belly up on venturing into China. Hopefully, Healthway doesn't go the same way.
On the local front, there is going to be a lot of competition for patients and the staff that serve them, ie doctors and nurses.

(25-02-2012, 05:25 PM)VestedInterest Wrote: Note that the Founder Medical Director has left the company 1- 2 years ago.
China is a highly risky bet for a medical/healthcare company. One very big GP practice I knew some years ago went belly up on venturing into China. Hopefully, Healthway doesn't go the same way.
On the local front, there is going to be a lot of competition for patients and the staff that serve them, ie doctors and nurses.

Doctor Wong Weng Hong? But he still remains a substantial shareholder of Healthway and Healthway Development. He pumped in money at 13c/shares just last year.

I think they have a good business Model, otherwise, The world Bank group would not have taken a 5.4% stake and extended a shareholder loan to them.

In the case of Q&M, the world bank group did not buy equity in the company but chose the option of convertible loan instead.