Singapore O&G Ltd

[mkmk]

Source: http://www.theedgemarkets.com/sg/article...09-million

Singapore O&G Ltd (SOG) where O&G stands for Obstetrics and Gynaecology, is planning to raise $10.9 million with a public offering of 43.6 million shares at 25 cents each.

Of these, 41.4 million are placement shares and the remainder will be offered to the public via bank ATMs.

SOG starts trading on Catalist on June 4 and the market cap at its IPO price is $54.5 million.

Earnings per share (EPS) of the enlarged share capital is 1.95 cents, indicating a historic PER of 12.8 times.

As a reference, although the business model is different, Raffles Medical’s historic PER based on FY2014’s EPS of 11.6 cents is 35.3 times.

UOB Kay Hian is forecasting SOG’s EPS for FY2015 at 14.3 cents, giving PER of 30.9 times.

The most attractive feature of the new listing is its dividend policy.

CEO Ng Koon Keng says the company does not have a formal dividend policy but targets to pay out up to 90% of its net profit for FY2015.

Based on FY2014’s net profit this would give the stock a dividend yield of 7.3%.

Dealers say investors like the stock and an institutional anchor shareholder has been lined up.

Prospectus: http://sgx.com/wps/wcm/connect/sgx_en/ho...ore+OG+Ltd.

My initial thoughts: good business, especially with the booming baby SG50 population.

[weijian]

Pretty amazing that 'no formal dividend policy' can be an 'attractive' dividend policy. Or in other words, pretty disappointed that its most attractive feature is just an unformalised promise to pay up to 90% of its net profit.

[valuebuddies]

O&G is very expensive and unreasonably charged against the patients. Most of the time the patients would have a thought of "what am I doing?" after waiting for nearly an hour in the clinic and see the gynae for 5 minutes and settle the hundred dollars of bill. And the most excited feature of the business is that auspicious cesarean delivery come with a surcharge ranging from few hundred dollars to thousands.

I can tell you that this is absolutely a cash cow business and money printing machine especially having operating in Singapore where generally all baby/child related expenses are overly priced. With this perspective, it also raises a doubt as to the real intention behind the listing. Why would the gynaes willing to share the profits with those ordinary people on the street?

If my prediction is not wrong, the listing would ultimately benefits the gynaes and not the shareholders. What is leftover with the company is just few peanuts for distributions to the minority monkeys.

I don't think I wanna be one of the monkey out there, but with such an interesting business, it may be a good hit and run target.

[Nick]

This reminds me of the Talkmed listing which has done really well since its IPO.

[whatamidoing]

O&G is very expensive and unreasonably charged against the patients. Most of the time the patients would have a thought of "what am I doing?" after waiting for nearly an hour in the clinic and see the gynae for 5 minutes and settle the hundred dollars of bill. And the most excited feature of the business is that auspicious cesarean delivery come with a surcharge ranging from few hundred dollars to thousands.

I can tell you that this is absolutely a cash cow business and money printing machine especially having operating in Singapore where generally all baby/child related expenses are overly priced. With this perspective, it also raises a doubt as to the real intention behind the listing. Why would the gynaes willing to share the profits with those ordinary people on the street?

If my prediction is not wrong, the listing would ultimately benefits the gynaes and not the shareholders. What is leftover with the company is just few peanuts for distributions to the minority monkeys.

I don't think I wanna be one of the monkey out there, but with such an interesting business, it may be a good hit and run target.

After the listing, the doctors will hold 80% of the company, with four main doctors holding 70% (the rest have smaller stakes). So in this case, the gynaes are the shareholders. Good alignment in my opinion.

[axt]

From what I have gathered, S$9.2m are expected from the IPO after deduction of the relevant expenses. The proceeds will be utilized as follows:

S$3m for business expansion: Looking to acquire as well as open more medical clinics. Also they currently only operating in Singapore but i believe they have ambitions to establish a “regional presence” in the future. In particular, Myanmar, Vietnam and Malaysia.

S$6m to be spent on investments in healthcare professionals and synergistic businesses: healthcare offerings to include infertility and IVF services; child care services; paediatrics (including neonatolgy); and gynaecological cancer specialties.

The remaining S$200,000 will be used for general working capital.

My initial thought:

1. Is S$3m enough for regional expansion? If not are we expecting future rights issues?

2. Paediatrics (PD) looks promising and I believe is another cash cow. For those with baby/child will know how expensive it is to see a PD for injection/consultation. The charge is easily more than double of a normal GP.

[pianist]

WHere to get the hardcopy prospectus?

[SniffGoodDeals]

WHere to get the hardcopy prospectus?

Can download from attached PDF file here?:
http://repository.shareinvestor.com/rpt_...pe/si_news

It's 344 pages though...

[Stephen]

Why does the doctors in SOG want to ipo?

Their business isnt really scalable as its limited by labour. They dont need much to raise much capital.
Wouldn't they be better off doing what they have been doing before as a private enterprise and therefore do not need to share any profits with other shareholders and keeping all to themselves?

Then u may say, they are cashing out..but the money raised isnt that much and i am sure they earn much more..

Listing now, they are saddled with more adminstration work.

Just weird.

And the dependency of apparently some super star doctors spell high risk...if they leave what happens to SOG.

[Stephen]

From what I have gathered, S$9.2m are expected from the IPO after deduction of the relevant expenses. The proceeds will be utilized as follows:

S$3m for business expansion: Looking to acquire as well as open more medical clinics. Also they currently only operating in Singapore but i believe they have ambitions to establish a “regional presence” in the future. In particular, Myanmar, Vietnam and Malaysia.

S$6m to be spent on investments in healthcare professionals and synergistic businesses: healthcare offerings to include infertility and IVF services; child care services; paediatrics (including neonatolgy); and gynaecological cancer specialties.

The remaining S$200,000 will be used for general working capital.

My initial thought:

1. Is S$3m enough for regional expansion? If not are we expecting future rights issues?

2. Paediatrics (PD) looks promising and I believe is another cash cow. For those with baby/child will know how expensive it is to see a PD for injection/consultation. The charge is easily more than double of a normal GP.

PD isnt really a cash cow i feel as compulsoty injections can be done in Polyclinics for a very very subsidised price. But i agree with you that when a child is sick, a PD is who parents will turn to, so ok it is kind of a cash cow.

About pap smear, i remember reading in an advert that pap smear is given free by some clinics, such as raffles medical or is it Thomson medical... i wonder how this works as these are private for profit enterprises.. maybe the government pay them for the number of pap smears they do.