Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ec-healthcare" target="_blank" data-smartkarma-citation="entities:22630:1" rel="noopener">EC Healthcare (2138 HK)</a> expects to achieve a record-high sales volume of no less than HK$1.8 in H1FY23, representing a no less than 17% y/y increase.  </li>
<li>The company is optimistic about its business development as the Hong Kong government’s pandemic policy stance is heading towards “normalization” and recently further relaxed quarantine arrangements for inbound travelers.</li>
<li>With the economy reopening, the company is in a position to reap the benefit of M&amp;A worth HK$641 million completed in FY22.  </li>
</ul>



EC Healthcare (2138 HK) expects to achieve a record-high sales volume of no less than HK$1.8 in H1FY23, representing a no less than 17% y/y increase.  
The company is optimistic about its business development as the Hong Kong government’s pandemic policy stance is heading towards “normalization” and recently further relaxed quarantine arrangements for inbound travelers.
With the economy reopening, the company is in a position to reap the benefit of M&amp;A worth HK$641 million completed in FY22.  


EC Healthcare (2138 HK): Record High Sales in H1FY23; Medical Segment Remains Key Growth Driver

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ec-healthcare" target="_blank" data-smartkarma-citation="entities:22630:1" rel="noopener">EC Healthcare (2138 HK)'s</a> Chairman and CEO acquired 543,000 shares at an average price of HKD9.1943 per share, thereby increasing his stake to 61.17% of the issued share capital.</li>
<li>H1FY22 and preliminary results for Q3FY22 shows continued business recovery. Medical services, which contributes 52.5% of total revenue continue to be the key growth driver.</li>
<li>In January, EC Healthcare acquired 55% equity interest in Bayley &amp; Jackson Dental Surgeons Limited for HKD129 million. Bayley &amp; Jackson operates seven dental clinics in Hong Kong.</li>
</ul>



EC Healthcare (2138 HK)'s Chairman and CEO acquired 543,000 shares at an average price of HKD9.1943 per share, thereby increasing his stake to 61.17% of the issued share capital.
H1FY22 and preliminary results for Q3FY22 shows continued business recovery. Medical services, which contributes 52.5% of total revenue continue to be the key growth driver.
In January, EC Healthcare acquired 55% equity interest in Bayley &amp; Jackson Dental Surgeons Limited for HKD129 million. Bayley &amp; Jackson operates seven dental clinics in Hong Kong.


EC Healthcare (2138 HK): An Attractive Idea with Insider Buying and Continued Business Recovery

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ec-healthcare" target="_blank" data-smartkarma-citation="entities:22630:1" rel="noopener">EC Healthcare (2138 HK)</a> reported record high revenue of HK$3.9B in FY23 and started FY24 on a strong note, with Q1FY24 revenue increasing 23% YoY, driven by medical services segment.</li>
<li>Cost pressure is negatively impacting the bottom line. The company is reporting decelerating EBITDA and net profit margins since FY20. ROE deteriorated to 4.5% in FY23 from 33% in FY19.</li>
<li>The company is well-positioned to see turnaround in profitability with the resumption of Mainland China visitors in Hong Kong providing impetus to high margin earning aesthetic business and cost optimization.</li>
</ul>



EC Healthcare (2138 HK) reported record high revenue of HK$3.9B in FY23 and started FY24 on a strong note, with Q1FY24 revenue increasing 23% YoY, driven by medical services segment.
Cost pressure is negatively impacting the bottom line. The company is reporting decelerating EBITDA and net profit margins since FY20. ROE deteriorated to 4.5% in FY23 from 33% in FY19.
The company is well-positioned to see turnaround in profitability with the resumption of Mainland China visitors in Hong Kong providing impetus to high margin earning aesthetic business and cost optimization.


EC Healthcare (2138 HK): Surging Revenue; Poised for Profitability Improvement; Future Looks Bright

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Perfect Medical Health / Equity Bottom-Up

<ul>
<li>We spoke with the management of <a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">Perfect Medical Health (1830 HK)</a>. The key highlight is a steady recovery for FY24e and an overall expansion of 60% in three years. </li>
<li>Expansion plans in HK (75% of revenue) have commenced, with ten centers opening over the year, adding to the existing 22 HK centers (one already opened in June 2023).</li>
<li>They also highlighted an aggressive long-term goal of making one bn HKD of profit by FY26 (Mkt cap: 4.8 bn HKD) and short-term guidance of 30-40% profit growth for FY24e. </li>
</ul>


We spoke with the management of Perfect Medical Health (1830 HK). The key highlight is a steady recovery for FY24e and an overall expansion of 60% in three years. 
Expansion plans in HK (75% of revenue) have commenced, with ten centers opening over the year, adding to the existing 22 HK centers (one already opened in June 2023).
They also highlighted an aggressive long-term goal of making one bn HKD of profit by FY26 (Mkt cap: 4.8 bn HKD) and short-term guidance of 30-40% profit growth for FY24e. 


Perfect Medical Management FY23 Concall: Highlights Bright Outlook for FY24, Aggressive Expansion

<a href="https://www.smartkarma.com/entities/water-oasis-group-ltd" target="_blank" data-smartkarma-citation="entities:17348:1" rel="noopener">Water Oasis (1161 HK)</a> is a micro-cap gem with the potential to provide a solid return over the next few months owing to a resurgence in beauty treatment in Hong Kong.  We believe the stock can easily double over the next 6 months due to the following catalyst:<ul>
<li>
Improved earnings outlook: With over 2.5 months of shutdowns in H1, we believe that the company is primed to grow its revenue and profitability in H2 2021. We forecast 450 mn HKD of revenue in H2 ( up from 315 mn HKD in H1 ), enabling the company to grow its profitability easily to 134 mn HKD in FY21 placing at 5.6x FY21.</li>
<li>
Huge margin of safety with cash representing 56% of the market capitalization: We believe this will provide ample buffer for the company to do M&amp;A as well as payout dividends.</li>
<li>
Great Dividend Payout Ratio Exceeding 80%: The company's dividend payout ratio exceeds 80% (at the very minimum), which implies a 14.3% dividend yield. </li>
<li>
Opportunity for M&amp;A: We believe with the state of the industry as beaten down as it is, the opportunity for M&amp;A is good, and the company has completed one transaction that we believe will be accretive. </li>
</ul>Risks<ul>
<li>Another Outbreak of Covid in HK which could result in shutdowns of their facilities.</li>
<li>This is a microcap and the company's investor communication is less, so it could take time for the story to play out.</li>
</ul>

Water Oasis (1161 HK) is a micro-cap gem with the potential to provide a solid return over the next few months owing to a resurgence in beauty treatment in Hong Kong.  We believe the stock can easily double over the next 6 months due to the following catalyst:

Improved earnings outlook: With over 2.5 months of shutdowns in H1, we believe that the company is primed to grow its revenue and profitability in H2 2021. We forecast 450 mn HKD of revenue in H2 ( up from 315 mn HKD in H1 ), enabling the company to grow its profitability easily to 134 mn HKD in FY21 placing at 5.6x FY21.

Huge margin of safety with cash representing 56% of the market capitalization: We believe this will provide ample buffer for the company to do M&amp;A as well as payout dividends.

Great Dividend Payout Ratio Exceeding 80%: The company's dividend payout ratio exceeds 80% (at the very minimum), which implies a 14.3% dividend yield. 

Opportunity for M&amp;A: We believe with the state of the industry as beaten down as it is, the opportunity for M&amp;A is good, and the company has completed one transaction that we believe will be accretive. 
Risks
Another Outbreak of Covid in HK which could result in shutdowns of their facilities.
This is a microcap and the company's investor communication is less, so it could take time for the story to play out.


Water Oasis - Micro Cap Gem with Great Return Potential

Hong Kong

EC Healthcare operates as a non-hospital medical service provider. The Company principally engages in the provision of medical, aesthetic medical, beauty and wellness services, and sale of skincare, healthcare and beauty products. EC Healthcare conducts businesses in Hong Kong, Macau, and Mainland China.

EC Healthcare (2138 HK)