SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

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Equity Bottom-Up

Singapore Small-Caps with Significant Institutional Inflow in 2019 

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<html><body>Growing up, Dr Raymond Ang's favourite hangout was Singapore General Hospital, the 198-year-old grand dame of healthcare institutions in the city-state. 
"My dad worked as a clinical technician, running SGH's EEG and ECG machines, and I would hang around him after school," recalled the Chief Operating Officer of SGX-listed Q &amp; M Dental Group (Singapore) Ltd. Electroencephalograms (EEGs) and electrocardiograms (ECGs) are tests that monitor electrical activity of the brain and heart. 
"As a kid, I spent quite a lot of time in the hospital, and that piqued my interest in healthcare. I was intrigued by the idea of being able to help someone, of making a difference to another person's well-being." 
Unfortunately - or fortunately in retrospect - Ang's attempt to pursue a course in medicine at the National University of Singapore decades later fell flat. 
"Everyone wanted to do medicine. Dentistry was not popular then - it wasn't a degree that you could impress someone important, like your future mother-in-law, for example," chuckled Ang. 
"Dental school was my second choice, and it was there that I met Chin Siau - another medical-school reject - and we became buddies," he added, referring to Dr Ng Chin Siau, Founder and Chief Executive Officer of Q &amp; M Dental Group. 
"We got to know each other pretty well during those years at university. He taught me how to play mahjong, and I probably helped to finance his education, since he frequently beat me at the game and won my pocket money!" Ang guffawed. 
That bond - forged over the clacking of mahjong tiles and spanning three decades - proved to be a catalyst for the transformation of the Group into a regional dental services provider. 
At first, their paths diverged. After graduation, Ng went on to open his Q &amp; M dental clinics, while Ang joined another dental practice. They became competitors, jockeying to see who could build a bigger network. Nearly another decade passed before their love for the Chinese tile-based game brought them together again. 
"We reconnected at a mahjong session with friends. At the time, I was thinking of leaving my practice, and it so happened that Chin Siau wanted to find someone to help him grow Q &amp; M to the next stage," Ang said. Catch a Shooting Star 
Back in the 80s and 90s, Singapore's dental industry was fragmented. "Each dentist was a sole proprietor, running his own business. Chin Siau had a grand vision of uniting a group of dentists under one roof to form the largest dental network in Singapore, with the eventual goal of listing it on the stock exchange," he recalled. 
"That was revolutionary. In those days, no one even liked to see a dentist, and doing an IPO for a dental practice was virtually unheard of." 
But Ang had faith, and he shared Ng's dream. "I believe that if you hitch a ride on a shooting star, you will go places you might not be able to reach on your own. And Chin Siau was that shooting star." 
In 2008, Ang was appointed Executive Director of Q &amp; M Dental Group. A year later, he assumed the role of Chief Operating Officer, managing the Group's human resources, information technology and marketing functions. 
The Bachelor of Dental Surgery graduate is also an elected member of the Singapore Dental Council (SDC). He chairs the SDC Audit Committee, and sits on the Complaints Panel, as well as the Continuing Professional Education (CPE) Committee. 
Q &amp; M Dental Group made its debut on the Mainboard of Singapore Exchange in November 2009. It celebrates its decade as a listed company this year, with a market capitalisation of over S$380 million. 
Today, it operates 74 dental outlets and four medical clinics in Singapore, 27 dental clinics in Malaysia, as well as three dental supplies and equipment distribution companies across Singapore, Malaysia and China. With more than 230 experienced dentists and nearly 400 supporting staff, the Group has an outreach of more than 600,000 patients locally. 
The Group owns 42.6% of Aoxin Q &amp; M Dental Group, which listed on SGX's Catalist board in April 2017. Aoxin manages and operates six dental hospitals and 11 dental polyclinics across eight cities in Liaoning province, north China. It also has its own dental laboratory and equipment distribution company. 
For Ang, the Group's growth journey has been nothing short of dramatic, splattered with blood, sweat and tears. 
"It's been a pretty wild ride," he admitted with a chortle. "To be able to accomplish one IPO in your lifetime is quite an achievement, but we actually did two, and both were dental IPOs, which is quite unusual." Bolt From the Blue 
On hindsight, what does he consider to be Q &amp; M Dental's make-or-break strategy? "It was the decision to expand overseas in 2013 and 2014 that was critical to our success," Ang said. 
"Singapore is a small market - there are only so many teeth you can drill or pull out," he noted, tongue firmly in cheek. 
Malaysia was the first and most obvious choice, being the city-state's closest neighbour and home base for many of the Group's dentists. Next was China, due to its physical proximity to Singapore, and demographic as the world's most populous country. 
"Back then, there were all these horror stories about investing in China and losing your pants. That made us very cautious about going into that market," he recalled. 
"At the same time, there was overwhelming competition. Every father's son and mother's daughter was venturing into the Tier 1 cities of Beijing, Shanghai and Guangzhou - all of us were chasing the same patient pool, which consisted of wealthy Chinese nationals and expatriates." 
In those early years, the Group's clinics in Nanjing and Beijing didn't bear much fruit. "We didn't lose money, but we didn't make much either." 
The turning point came as a bolt from the blue, with an unsolicited telephone call from Shenyang-based oral medicine specialist Dr Shao Yongxin, who later became the CEO of Aoxin Q &amp; M Dental Group. 
"Dr Shao had heard about Q &amp; M Dental Group in Singapore, and wanted to learn from us, to find out how he could also successfully list his dental hospital on the stock exchange," Ang said. 
Through Shao, Ang and Ng were introduced not only to the joys of baijiu (白酒) - China's national liquor distilled from fermented grains that packs a fiery punch - but also Shenyang, capital of Liaoning, the country's largest province in the northeast. 
"With a population of about eight million, Shenyang is a huge city, but no one was there. This partnership also gave us the opportunity to own private dental hospitals - the main mode of expansion in China's dental industry - as opposed to individual clinics." 
Owning private dental hospitals in Shenyang also opened up other opportunities, including research and development (R&amp;D) collaborations, human resources management, as well as access to China's healthcare insurance programs. These dental hospitals are also a branch of Jinzhou Medical University, which facilitates the training of its dental students. 
"This means that patients are queuing up for appointments in our clinics, rather than our dentists sitting around waiting for patients to call. In China, the population is where you win the game," he added. No Risk, No Gain 
While the road ahead will have its fair share of bumps, the Group's focus and strategy are clear. "We will continue to pursue organic expansion in our existing markets of Singapore, Malaysia and China, which have enjoyed good growth so far," Ang noted. 
"The next big wave of our regional push - into Southeast Asia - will take place within three years," he said, adding that the Group is exploring opportunities in Thailand, Cambodia, Myanmar and Vietnam. 
Competition in Southeast Asia's dental markets remains muted, partly due to the splintered nature of the industry. "Not many local dental firms are expanding as aggressively as us overseas, and there are pockets of opportunity, particularly in Indochina." 
But new markets also mean increased risk exposure. "To grow, we need to take calculated risks - no risk, no gain." 
That's why the Group is taking its time to understand regulatory infrastructure and policies in the different markets before jumping in. "We've been spending time building knowledge in each country, and looking at whether we should work with strong local partners," Ang noted. 
Ultimately, it's about leveraging Q &amp; M Dental Group's already familiar brand. "Our success in China has attracted attention, and our name is known in the region. The next step is to for us become the top clinical dentistry brand in Asia Pacific," he added. 
And the outlook is bright, thanks to favourable healthcare dynamics. 
"In the 70s and 80s, people never cared much about their teeth - if it rots, pull it out; if you lose all your teeth, just get dentures. But as the population matures and wealth increases, consumers' expectations and healthcare standards change," Ang pointed out. 
There's now a growing realisation that teeth do more than just chew food - they also play important roles in speech, physical appearance and first impressions. 
"Societies are moving away from pull and replace to preventing decay and loss, as well as aesthetics, such as orthodontics and veneers. Overall demand for dental services will also rise as populations age," he added. 
With industry trends shifting more into specialist dental services, such as root canals, crowns and bridges, constant technological innovation is critical to keep abreast of the competition. 
Q &amp; M Dental is one of the pioneers of Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM) dentistry in Singapore, and the first worldwide to produce multi-layer zirconium blocks - used in teeth restoration - through its Chinese associate Aidite (Qinhuangdao) Technology. 
"We're moving into pioneer territory by developing AI-based diagnostics and treatments, which will raise the bar on treatment quality and planning in the region," he added. 
To achieve this, Q &amp; M Dental AI was set up in November 2018. The first prototype of the artificial intelligence (AI) software is expected to be rolled out in the final quarter of this year. The Next Generation 
Apart from tech, grooming and retaining talent looms large in Ang's mind. 
"What keeps me awake at night - apart from too many cups of coffee - is the issue of leadership renewal," he said. "Although Chin Siau and I are in our 50s, and we still have some way to go, we need to focus on the next generation of leaders at Q &amp; M." 
"The key is to tackle this not when current management is on its way out, but when we - and the organisation - are on our way up. With the latter, our employees will be able to grow together with us, understand the culture better, and plan for the long term more effectively," he added. 
The Group set up its Q &amp; M College of Dentistry subsidiary in end-2018, and is planning to offer a post-graduate dental diploma programme, training new dentists in implant dentistry, root canal treatment, prosthodontics and other surgical procedures. It also offers sponsorships and bursaries for aspiring dental graduates, as well as job attachments to the Group's specialists and senior dentists in the region. 
When the jovial 50-year-old is not caught up in board or investor meetings, he is treating patients in his Bukit Panjang and City Square Mall clinics. "I make it a point to see patients twice a week - that's my down time and I really enjoy it," Ang grinned. 
"Dentistry is a science, where one plus one equals two. Running a listed company is not - the results are not 100% predictable. You can do everything right, and things can still turn out wrong!" he added with a guffaw. 
At the end of the day, Ang's passion is his patients. That also forms the backbone of the Quan Ming (全民) brand, which means "for the people" in Mandarin.  
"I always tell my dentists - I am not your boss, your patients are your boss, and they're paying your salaries. It's your job to impress them and keep them happy," he noted. 
"Ultimately, the patient must come first - that has always been our priority and the Group's focus."</body></html>

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Q &amp; M Dental Group (Singapore) Ltd

Q &amp; M Dental Group is a leading private dental healthcare group in Asia, established in 1996. The Group operates 74 dental outlets and four medical clinics in Singapore, 27 dental clinics in Malaysia, as well as three dental supplies and equipment distribution companies across Singapore, Malaysia and China. Underpinned by over 230 experienced dentists and close to 400 supporting staff, the Group owns the largest network of private dental outlets in Singapore, with an outreach of more than 600,000 patients. 
The company website is: <a href="http://edm.sgx.com/a/hBdevgmB86%24MfB9zo82AAAAAAcq/link8">www.qandm.com.sg</a>. 
Click <a href="http://edm.sgx.com/a/hBdevgmB86%24MfB9zo82AAAAAAcq/link9">here</a> for the company's StockFacts page. 
For the three months ended 30 June 2019 financial results, click <a href="http://edm.sgx.com/a/hBdevgmB86%24MfB9zo82AAAAAAcq/link10">here</a>. 
To read the previously published SGX kopi-C profile of Aoxin Q &amp; M Dental, click <a href="http://edm.sgx.com/a/hBdevgmB86%24MfB9zo82AAAAAAcq/link11">here</a>.

About kopi-C: the Company brew

Text: Jennifer LH Tan Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBdevgmB86%24MfB9zo82AAAAAAcq/link12">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="mailto:jennifer.tan@sgx.com">jennifer.tan@sgx.com</a>.
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    Q&M Dental 

Growing up, Dr Raymond Ang's favourite hangout was Singapore General Hospital, the 198-year-old grand dame of healthcare institutions in the city-state.  
"My dad worked as a clinical technician, running SGH's EEG and ECG machines, and I would hang around him after school," recalled the Chief Operating Officer of SGX-listed Q &amp; M Dental Group (Singapore) Ltd. Electroencephalograms (EEGs) and electrocardiograms (ECGs) are tests that monitor electrical activity of the brain and heart.  
"As a kid, I spent quite a lot of time in the hospital, and that piqued my interest in healthcare. I was intrigued by the idea of being able to help someone, of making a difference to another person's well-being."  
Unfortunately - or fortunately in retrospect - Ang's attempt to pursue a course in medicine at the National University of Singapore decades later fell flat.  
"Everyone wanted to do medicine. Dentistry was not popular then - it wasn't a degree that you could impress someone important, like your future mother-in-law, for example," chuckled Ang.  
"Dental school was my second choice, and it was there that I met Chin Siau - another medical-school reject - and we became buddies," he added, referring to Dr Ng Chin Siau, Founder and Chief Executive Officer of Q &amp; M Dental Group.  
"We got to know each other pretty well during those years at university. He taught me how to play mahjong, and I probably helped to finance his education, since he frequently beat me at the game and won my pocket money!" Ang guffawed.  
That bond - forged over the clacking of mahjong tiles and spanning three decades - proved to be a catalyst for the transformation of the Group into a regional dental services provider.  
At first, their paths diverged. After graduation, Ng went on to open his Q &amp; M dental clinics, while Ang joined another dental practice. They became competitors, jockeying to see who could build a bigger network. Nearly another decade passed before their love for the Chinese tile-based game brought them together again.  
"We reconnected at a mahjong session with friends. At the time, I was thinking of leaving my practice, and it so happened that Chin Siau wanted to find someone to help him grow Q &amp; M to the next stage," Ang said.  Catch a Shooting Star  
Back in the 80s and 90s, Singapore's dental industry was fragmented. "Each dentist was a sole proprietor, running his own business. Chin Siau had a grand vision of uniting a group of dentists under one roof to form the largest dental network in Singapore, with the eventual goal of listing it on the stock exchange," he recalled.  
"That was revolutionary. In those days, no one even liked to see a dentist, and doing an IPO for a dental practice was virtually unheard of."  
But Ang had faith, and he shared Ng's dream. "I believe that if you hitch a ride on a shooting star, you will go places you might not be able to reach on your own. And Chin Siau was that shooting star."  
In 2008, Ang was appointed Executive Director of Q &amp; M Dental Group. A year later, he assumed the role of Chief Operating Officer, managing the Group's human resources, information technology and marketing functions.  
The Bachelor of Dental Surgery graduate is also an elected member of the Singapore Dental Council (SDC). He chairs the SDC Audit Committee, and sits on the Complaints Panel, as well as the Continuing Professional Education (CPE) Committee.  
Q &amp; M Dental Group made its debut on the Mainboard of Singapore Exchange in November 2009. It celebrates its decade as a listed company this year, with a market capitalisation of over S$380 million.  
Today, it operates 74 dental outlets and four medical clinics in Singapore, 27 dental clinics in Malaysia, as well as three dental supplies and equipment distribution companies across Singapore, Malaysia and China. With more than 230 experienced dentists and nearly 400 supporting staff, the Group has an outreach of more than 600,000 patients locally.  
The Group owns 42.6% of Aoxin Q &amp; M Dental Group, which listed on SGX's Catalist board in April 2017. Aoxin manages and operates six dental hospitals and 11 dental polyclinics across eight cities in Liaoning province, north China. It also has its own dental laboratory and equipment distribution company.  
For Ang, the Group's growth journey has been nothing short of dramatic, splattered with blood, sweat and tears.  
"It's been a pretty wild ride," he admitted with a chortle. "To be able to accomplish one IPO in your lifetime is quite an achievement, but we actually did two, and both were dental IPOs, which is quite unusual."  Bolt From the Blue  
On hindsight, what does he consider to be Q &amp; M Dental's make-or-break strategy? "It was the decision to expand overseas in 2013 and 2014 that was critical to our success," Ang said.  
"Singapore is a small market - there are only so many teeth you can drill or pull out," he noted, tongue firmly in cheek.  
Malaysia was the first and most obvious choice, being the city-state's closest neighbour and home base for many of the Group's dentists. Next was China, due to its physical proximity to Singapore, and demographic as the world's most populous country.  
"Back then, there were all these horror stories about investing in China and losing your pants. That made us very cautious about going into that market," he recalled.  
"At the same time, there was overwhelming competition. Every father's son and mother's daughter was venturing into the Tier 1 cities of Beijing, Shanghai and Guangzhou - all of us were chasing the same patient pool, which consisted of wealthy Chinese nationals and expatriates."  
In those early years, the Group's clinics in Nanjing and Beijing didn't bear much fruit. "We didn't lose money, but we didn't make much either."  
The turning point came as a bolt from the blue, with an unsolicited telephone call from Shenyang-based oral medicine specialist Dr Shao Yongxin, who later became the CEO of Aoxin Q &amp; M Dental Group.  
"Dr Shao had heard about Q &amp; M Dental Group in Singapore, and wanted to learn from us, to find out how he could also successfully list his dental hospital on the stock exchange," Ang said.  
Through Shao, Ang and Ng were introduced not only to the joys of baijiu (白酒) - China's national liquor distilled from fermented grains that packs a fiery punch - but also Shenyang, capital of Liaoning, the country's largest province in the northeast.  
"With a population of about eight million, Shenyang is a huge city, but no one was there. This partnership also gave us the opportunity to own private dental hospitals - the main mode of expansion in China's dental industry - as opposed to individual clinics."  
Owning private dental hospitals in Shenyang also opened up other opportunities, including research and development (R&amp;D) collaborations, human resources management, as well as access to China's healthcare insurance programs. These dental hospitals are also a branch of Jinzhou Medical University, which facilitates the training of its dental students.  
"This means that patients are queuing up for appointments in our clinics, rather than our dentists sitting around waiting for patients to call. In China, the population is where you win the game," he added.  No Risk, No Gain  
While the road ahead will have its fair share of bumps, the Group's focus and strategy are clear. "We will continue to pursue organic expansion in our existing markets of Singapore, Malaysia and China, which have enjoyed good growth so far," Ang noted.  
"The next big wave of our regional push - into Southeast Asia - will take place within three years," he said, adding that the Group is exploring opportunities in Thailand, Cambodia, Myanmar and Vietnam.  
Competition in Southeast Asia's dental markets remains muted, partly due to the splintered nature of the industry. "Not many local dental firms are expanding as aggressively as us overseas, and there are pockets of opportunity, particularly in Indochina."  
But new markets also mean increased risk exposure. "To grow, we need to take calculated risks - no risk, no gain."  
That's why the Group is taking its time to understand regulatory infrastructure and policies in the different markets before jumping in. "We've been spending time building knowledge in each country, and looking at whether we should work with strong local partners," Ang noted.  
Ultimately, it's about leveraging Q &amp; M Dental Group's already familiar brand. "Our success in China has attracted attention, and our name is known in the region. The next step is to for us become the top clinical dentistry brand in Asia Pacific," he added.  
And the outlook is bright, thanks to favourable healthcare dynamics.  
"In the 70s and 80s, people never cared much about their teeth - if it rots, pull it out; if you lose all your teeth, just get dentures. But as the population matures and wealth increases, consumers' expectations and healthcare standards change," Ang pointed out.  
There's now a growing realisation that teeth do more than just chew food - they also play important roles in speech, physical appearance and first impressions.  
"Societies are moving away from pull and replace to preventing decay and loss, as well as aesthetics, such as orthodontics and veneers. Overall demand for dental services will also rise as populations age," he added.  
With industry trends shifting more into specialist dental services, such as root canals, crowns and bridges, constant technological innovation is critical to keep abreast of the competition.  
Q &amp; M Dental is one of the pioneers of Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM) dentistry in Singapore, and the first worldwide to produce multi-layer zirconium blocks - used in teeth restoration - through its Chinese associate Aidite (Qinhuangdao) Technology.  
"We're moving into pioneer territory by developing AI-based diagnostics and treatments, which will raise the bar on treatment quality and planning in the region," he added.  
To achieve this, Q &amp; M Dental AI was set up in November 2018. The first prototype of the artificial intelligence (AI) software is expected to be rolled out in the final quarter of this year.  The Next Generation  
Apart from tech, grooming and retaining talent looms large in Ang's mind.  
"What keeps me awake at night - apart from too many cups of coffee - is the issue of leadership renewal," he said. "Although Chin Siau and I are in our 50s, and we still have some way to go, we need to focus on the next generation of leaders at Q &amp; M."  
"The key is to tackle this not when current management is on its way out, but when we - and the organisation - are on our way up. With the latter, our employees will be able to grow together with us, understand the culture better, and plan for the long term more effectively," he added.  
The Group set up its Q &amp; M College of Dentistry subsidiary in end-2018, and is planning to offer a post-graduate dental diploma programme, training new dentists in implant dentistry, root canal treatment, prosthodontics and other surgical procedures. It also offers sponsorships and bursaries for aspiring dental graduates, as well as job attachments to the Group's specialists and senior dentists in the region.  
When the jovial 50-year-old is not caught up in board or investor meetings, he is treating patients in his Bukit Panjang and City Square Mall clinics. "I make it a point to see patients twice a week - that's my down time and I really enjoy it," Ang grinned.  
"Dentistry is a science, where one plus one equals two. Running a listed company is not - the results are not 100% predictable. You can do everything right, and things can still turn out wrong!" he added with a guffaw.  
At the end of the day, Ang's passion is his patients. That also forms the backbone of the Quan Ming (全民) brand, which means "for the people" in Mandarin.   
"I always tell my dentists - I am not your boss, your patients are your boss, and they're paying your salaries. It's your job to impress them and keep them happy," he noted.  
"Ultimately, the patient must come first - that has always been our priority and the Group's focus."



Q &amp; M Dental Group (Singapore) Ltd

Q &amp; M Dental Group is a leading private dental healthcare group in Asia, established in 1996. The Group operates 74 dental outlets and four medical clinics in Singapore, 27 dental clinics in Malaysia, as well as three dental supplies and equipment distribution companies across Singapore, Malaysia and China. Underpinned by over 230 experienced dentists and close to 400 supporting staff, the Group owns the largest network of private dental outlets in Singapore, with an outreach of more than 600,000 patients.  
The company website is: www.qandm.com.sg.  
Click here for the company's StockFacts page.  
For the three months ended 30 June 2019 financial results, click here.  
To read the previously published SGX kopi-C profile of Aoxin Q &amp; M Dental, click here.

About kopi-C: the Company brew

Text: Jennifer LH Tan Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.tan@sgx.com.



Q & M Dental Embarks on Asian Brand-Building Journey





Alliance Healthcare Group, an integrated healthcare group, listed on SGX Catalist today. The Group leverages the use of technology to provide a broad suite of healthcare services primarily in Singapore. 
	 
	
Innovations in digital healthcare, coupled with growth in healthcare insurance sector bode well for the healthcare industry in Singapore. Some growth drivers include healthcare-related technology disruptions, growing corporate healthcare insurance coverage, as well as consolidation of general practitioner (GP) clinics in a highly fragmented market. 
	 
	
SGX lists eighteen healthcare service provider stocks with a combined market capitalisation of S$22 billion. The eighteen stocks average a price-to-earnings ratio of 28.1x.


 

Overview and Drivers of Healthcare Industry

Innovations in digital healthcare and growth in healthcare insurance sector have allowed healthcare providers to leverage on technology to provide better services and access to higher potential patient volume. In page 41 of its offer document, Alliance Healthcare Group identified the following industry trends and drivers:



Technology disruptions – According to Converging Knowledge, there have been many new innovations introduced in the healthcare sector. Increasingly, healthcare providers are also tapping into technology to provide better and more efficient services to customers. The Singapore government’s push towards digital transformation of the healthcare industry will likely expand the Group’s network of potential pool of medical services provider as an increasing number of practitioners move towards digitization of operations. 
	 
	
Growth in corporate healthcare insurance premiums in Singapore – According to the Life Insurance Association Singapore, the amount of group accident and health premiums in force increased from S$682.7 million in 2016, to S$788.0 million in 2017 (+15.4% YoY). According to Converging Knowledge, a higher amount of group accident and health premiums in force may suggest increased coverage for employees, or more companies signing up for corporate healthcare insurance coverage. With insurance companies increasingly outsourcing policy administration and claims processing, growth in the healthcare insurance sector will translate into higher potential patient volume for managed healthcare solutions business. 
	 
	
Consolidation of GP clinics in Singapore – According to Converging Knowledge, industry players expect a growing number of Singapore GP clinics to consolidate in the next three years. The mature yet highly fragmented GP services market in Singapore presents opportunities for the Group to seek inorganic growth in this sector through acquisitions.

Alliance Healthcare Group’s Catalist IPO

Alliance Healthcare Group is an integrated healthcare group that designs and provides enterprise-level healthcare solutions to meet the demands of organisations as well as individual patients for reliable and cost-effective healthcare services.

Post listing, major shareholder Alpine Investment Holdings will hold 64.2% in Alliance Healthcare Group.

Some key extracts from its offer document include:

Business Strategies and Future Plans


Expand network of self-owned GP clinics, specialist care services and medical facilities in Singapore
	Pursue growth through acquisitions, joint ventures and/or strategic alliances
	Invest in technology systems as part of the digital transformation in the delivery of healthcare services
	Expand pharmaceutical services business

Competitive Strengths


Successfully established in delivering managed healthcare solutions
	Knowledge and competencies to assist corporations and insurance companies in managing escalating healthcare cost due to a quickly-ageing population
	Integrated approach towards delivering healthcare services
	Continuous innovation in delivering healthcare solutions
	Experienced management team led by Executive Chairman and CEO who is a medical professional

Key Risks (Page 54 of the Offer Document shows complete list of risk factors)


Many of the Group’s business operations subject to extensive government laws, regulations, licensing and accreditation which are evolving
	Business dependent on demand for managed healthcare solutions from corporations and insurers
	Ability to attract and retain skilled and qualified medical professionals and support staff
	Dependent on number of key relationships with insurance companies for patient volume
	Dependent on relationships with panel of medical services providers, corporations and insurance companies (whom have contractual relationships with the Group)

Financials From Offer Document


According to the offer document, the Group’s audited FY2018 total revenue was at S$33.8 million, increasing 14.9% YoY due to increase in revenue from all business segments.
	FY2018 net profit after tax was S$3.5 million, almost double that of FY2017.
	Net profit margin of the Group increased from 5.9% in FY2017 to 10.3% in FY2018.
	Alliance Healthcare Group currently does not have a fixed dividend policy. However, the Board intends to recommend and distribute dividends of at least 30% of the Group’s net profits after tax (excl. exceptional items) for FY2020 and FY2021 to reward shareholders for participating in the Group’s growth.




			Profit (loss) before tax by business segment (%²)
			
			
			FY2016
			
			
			FY2017
			
			
			FY2018
			
		


			Managed healthcare solutions
			
			
			(60.4)
			
			
			9.3
			
			
			39.5
			
		


			GP clinics services
			
			
			174.6
			
			
			64.5
			
			
			31.4
			
		


			Specialist care services
			
			
			14.8
			
			
			18.7
			
			
			14.4
			
		


			Pharmaceutical services
			
			
			27
			
			
			26.2
			
			
			21.2
			
		


			Others¹
			
			
			(56)
			
			
			(18.7)
			
			
			(6.5)
			
		


			Total
			
			
			100
			
			
			100
			
			
			100
			
		

Note: 
(1) “Others” refers to investment holding and provision of administrative and management services. 
(2) “%” is computed based on the business segmental profit (loss) before tax divided by the audited consolidated profit before tax of the Group.

      
    
    Alliance Healthcare Financials
Valuation


According to the offer document, the Group’s FY2018 historical EPS was at 1.66 cents (S$) (based on Company’s share capital immediately before completion of invitation shares of 175.9 million shares and assuming that the service agreements had been in place from the beginning of FY2018).
	Based on the invitation price of S$0.20 per share, this implies a P/E ratio of 12.1x.
	A premium over NAV of 258.1% (after adjusting for the estimated net proceeds from invitation shares issuance and company’s share capital immediately after the completion of the invitation).

SGX’s Healthcare Stocks 

SGX lists 18 healthcare service provider stocks with a combined market capitalisation of S$22 billion. The 18 stocks have an average price-to-earnings ratio of 28.1x and generated an average year-to-date total return of -2.3%. The table below details the 18 healthcare stocks, sorted by market capitalisation. Click on the stock name to view its profile in StockFacts.

 




			Name 
			
			
			SGX Code
			
			
			Market Cap S$M
			
			
			Price S$
			
			
			Total Return YTD %
			
			
			1 Year Total Return %
			
			
			3 Year Total Return %
			
			
			P/E (x)
			
			
			P/B (x)
			
			
			ROE (%)
			
			
			Div Yield %
			
		



			IHH Healthcare
			
			
			Q0F
			
			
			15,702
			
			
			1.79
			
			
			0.0
			
			
			-10.0
			
			
			-6.9
			
			
			NM¹
			
			
			2.0
			
			
			2.7
			
			
			0.6
			
		


			Raffles Medical Group
			
			
			BSL
			
			
			1,834
			
			
			1.02
			
			
			-5.5
			
			
			-1.4
			
			
			-11.1
			
			
			26.6
			
			
			2.2
			
			
			8.8
			
			
			2.5
			
		


			Thomson Medical Group
			
			
			A50
			
			
			1,454
			
			
			0.055
			
			
			-24.4
			
			
			-31.7
			
			
			-25.1
			
			
			73.5
			
			
			2.5
			
			
			0.2
			
			
			0.5
			
		


			Talkmed Group
			
			
			5G3
			
			
			697
			
			
			0.53
			
			
			-9.8
			
			
			-17.7
			
			
			7.0
			
			
			22.8
			
			
			8.6
			
			
			38.4
			
			
			3.4
			
		


			Health Management International
			
			
			588
			
			
			486
			
			
			0.58
			
			
			8.0
			
			
			-7.6
			
			
			22.5
			
			
			29.2
			
			
			N/A
			
			
			N/A
			
			
			1.1
			
		


			Q&amp;M Dental Group
			
			
			QC7
			
			
			389
			
			
			0.495
			
			
			-0.1
			
			
			-5.0
			
			
			-11.2
			
			
			29.2
			
			
			3.3
			
			
			11.5
			
			
			1.7
			
		


			OUE Lippo Healthcare
			
			
			5WA
			
			
			289
			
			
			0.065
			
			
			0.0
			
			
			-39.1
			
			
			2.5
			
			
			N/A
			
			
			1.2
			
			
			-3.5
			
			
			N/A
			
		


			Singapore Medical Group
			
			
			5OT
			
			
			183
			
			
			0.385
			
			
			-3.8
			
			
			-20.6
			
			
			37.2
			
			
			14.0
			
			
			1.4
			
			
			10.8
			
			
			N/A
			
		


			Singapore O&amp;G
			
			
			1D8
			
			
			172
			
			
			0.36
			
			
			5.4
			
			
			4.8
			
			
			1.2
			
			
			18.7
			
			
			3.8
			
			
			20.8
			
			
			4.7
			
		


			ISEC Healthcare
			
			
			40T
			
			
			160
			
			
			0.31
			
			
			28.6
			
			
			12.2
			
			
			10.2
			
			
			18.8
			
			
			2.3
			
			
			12.4
			
			
			8.2
			
		


			Healthway Medical Corp
			
			
			5NG
			
			
			127
			
			
			0.028
			
			
			-12.5
			
			
			-41.7
			
			
			-4.3
			
			
			N/A
			
			
			0.7
			
			
			-3.8
			
			
			N/A
			
		


			Cordlife Group
			
			
			P8A
			
			
			117
			
			
			0.46
			
			
			22.2
			
			
			-42.1
			
			
			-29.8
			
			
			28.2
			
			
			N/A
			
			
			N/A
			
			
			0.9
			
		


			HC Surgical Specialists
			
			
			1B1
			
			
			83
			
			
			0.555
			
			
			-6.8
			
			
			-16.4
			
			
			N/A
			
			
			18.6
			
			
			4.9
			
			
			29.2
			
			
			3.6
			
		


			Clearbridge Health
			
			
			1H3
			
			
			76
			
			
			0.156
			
			
			-6.6
			
			
			-63.7
			
			
			N/A
			
			
			N/A
			
			
			1.6
			
			
			-34.0
			
			
			N/A
			
		


			Asian Healthcare Specialists
			
			
			1J3
			
			
			75
			
			
			0.23
			
			
			5.4
			
			
			-16.2
			
			
			N/A
			
			
			24.7
			
			
			4.2
			
			
			32.6
			
			
			4.3
			
		


			Aoxin Q &amp; M Dental Group
			
			
			1D4
			
			
			72
			
			
			0.19
			
			
			-15.6
			
			
			-11.8
			
			
			N/A
			
			
			N/A
			
			
			1.5
			
			
			-0.2
			
			
			2.2
			
		


			Medinex
			
			
			OTX
			
			
			35
			
			
			0.27
			
			
			3.1
			
			
			N/A
			
			
			N/A
			
			
			33.3
			
			
			2.6
			
			
			8.3
			
			
			3.1
			
		


			AsiaMedic
			
			
			505
			
			
			5
			
			
			0.012
			
			
			-29.4
			
			
			-68.4
			
			
			-43.0
			
			
			N/A
			
			
			1.1
			
			
			-70.7
			
			
			N/A
			
		


			Average
			
			 
			 
			 
			
			-2.3
			
			
			-22.1
			
			
			-3.9
			
			
			28.1
			
			
			2.8
			
			
			4.0
			
			
			2.8
			
		


			Market Cap-Weighted Average
			
			 
			 
			 
			
			-2.0
			
			
			-11.6
			
			
			-6.8
			
			
			37.8
			
			
			2.3
			
			
			4.6
			
			 
		

Note: (1) Not Meaningful 
Source: Bloomberg &amp; SGX StockFacts (Data as of 30 May 2019)

Additional Information from Offer Document

Company Background  
Alliance Healthcare Group is an integrated healthcare group that leverages the use of technology to provide a broad suite of healthcare services primarily in Singapore. As part of the service offerings, the Group design and 
provide enterprise-level healthcare solutions to meet the demands of organisations as well as individual patients for reliable and cost-effective healthcare services. Majority of the Group’s revenue are derived from Singapore, which accounts for 89.5% of FY2018 total revenue. In the same year, Hong Kong market contributed to 3.2% of the Group’s revenue.

Business Segment



GP clinic services (46.1% of FY2018 total revenue) – Provides services that include general medical consultations, management of acute and chronic conditions, health screening for work permit applications as well as pre-employment health screening, children’s health services, geriatric care and minor surgical procedures.
	
Pharmaceutical services (25.2% of FY2018 total revenue) – Engages in the wholesale distribution of pharmaceutical products to hospitals, pharmacies and clinics in Singapore and other overseas markets.
	
Managed healthcare solutions (14.5% of FY2018 total revenue) – Provides solution for outpatient healthcare and treatments at private hospitals.
	
Specialist care services (14.2% of FY2018 total revenue) – Delivers medical diagnosis and medical or surgical treatments of ENT, colorectal and orthopaedic conditions.

IPO Details


Offer price at S$0.20
	32 million Invitation Shares consisting of 1.0 million Invitation shares (public offer) and 31.0 million Placement Shares
	Estimated IPO market capitalisation at S$41.6 million
	Use of IPO gross proceeds (S$6.4 million)
	
S$3.0 million – Expand the Group’s business through (i) expansion of self-owned GP clinics network, specialist care services and medical facilities in Singapore as well as (ii) acquisitions, joint ventures and/or strategic alliances.
		S$1.9  million – Underwriting and placement commissions as well as listing expenses
		S$0.8  million – Working capital requirements
		S$0.5 million – Invest in technology systems as part of the digital transformation of the delivery of healthcare services
		S$0.2 million – Expand pharmaceutical services business
	


Did You Know?

Singapore leads Southeast Asia in digital healthcare practices even as the adoption of digital healthcare remains low in the region. One of the contributing factors is the government’s promotion of IT adoption and innovation in the healthcare sector. The Integrated Clinic Management Systems programme was launched a decade ago to improve the operations of General Practitioner (GP) clinics and better plan for patient treatments in coordination with hospitals and other healthcare providers. In 2017, the country announced it would pump in more than S$19 billion over five years for research and development, some of which will go towards innovation at the intersection of healthcare and IT.



Alliance Healthcare, Leveraging on Digital Health Trends, Debuts on SGX

APAC IPOs & Placements

Zhen Zhou, Toh

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Qualitas Medical Group / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/26971" target="_blank" data-smartkarma-citation="entities:26971:1" rel="noopener">Qualitas Medical Group (QMGL SP)</a> is looking to raise approximately US$102m in its upcoming IPO. The company will be using the proceeds to make strategic investments and acquisitions, seek out organic growth and initiatives, and general corporate purposes.
In this insight, we will look at the company's business, examine the changes since it got privatized in 2011, compare it against other regional healthcare peers. We will also run the deal through our ECM framework.

Qualitas Medical Group (QMGL SP) is looking to raise approximately US$102m in its upcoming IPO. The company will be using the proceeds to make strategic investments and acquisitions, seek out organic growth and initiatives, and general corporate purposes.
In this insight, we will look at the company's business, examine the changes since it got privatized in 2011, compare it against other regional healthcare peers. We will also run the deal through our ECM framework.

Qualitas Medical Group IPO Review - Valuation up 95% in One Month

Q & M Dental Group (Singapore) / Equity Bottom-Up

Oral medicine specialist Dr Shao Yongxin has always been fascinated by the artistry and technical expertise involved in the practice of dentistry.
The standards of excellence demanded by the profession, and Shao's willingness to strive for perfection in his craft, were catalysts for his three decade-long journey in stomatology, a science that deals with the mouth and its diseases.
"I felt that dentistry, in particular, prosthodontics, offered a limitless space for me to constantly improve myself and hone my skills," Shao said.
"At the same time, as my patients found hope and obtained relief through their treatments, I discovered joy, meaning and a sense of achievement."

Oral medicine specialist Dr Shao Yongxin has always been fascinated by the artistry and technical expertise involved in the practice of dentistry.
The standards of excellence demanded by the profession, and Shao's willingness to strive for perfection in his craft, were catalysts for his three decade-long journey in stomatology, a science that deals with the mouth and its diseases.
"I felt that dentistry, in particular, prosthodontics, offered a limitless space for me to constantly improve myself and hone my skills," Shao said.
"At the same time, as my patients found hope and obtained relief through their treatments, I discovered joy, meaning and a sense of achievement."

Aoxin (QNM SP) Takes a Big Bite of China's Buoyant Dental Market

Singapore

Q & M Dental Group (Singapore) Limited operates dental clinics. The Company offers aesthetic, children's and general dentistry; fits crowns, dentures and braces; and offers bleeding gum treatment, gum surgery and oral surgery; and treats snoring and teeth grinding.

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