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

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/ump-healthcare-holdings-ltd" target="_blank" data-smartkarma-citation="entities:21005:1" rel="noopener">UMP Healthcare (722 HK)</a> reported soft results for FY25, with revenues/core net profits down 3%/10% YoY, due to a weak consumer spending environment in Hong Kong. </li>
<li>Cost-Cutting initiatives helped boost EBITDA margins, with PBT remaining flat despite a decline in revenue; however, a higher effective tax rate resulted in lower profits.</li>
<li>The company has HKD 330 million in net cash, representing more than 80% of its market capitalization, with a trailing P/E multiple of 12.4x and a dividend yield of 6.7%. </li>
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UMP Healthcare (722 HK) reported soft results for FY25, with revenues/core net profits down 3%/10% YoY, due to a weak consumer spending environment in Hong Kong. 
Cost-Cutting initiatives helped boost EBITDA margins, with PBT remaining flat despite a decline in revenue; however, a higher effective tax rate resulted in lower profits.
The company has HKD 330 million in net cash, representing more than 80% of its market capitalization, with a trailing P/E multiple of 12.4x and a dividend yield of 6.7%. 


UMP Healthcare (722 HK): Cash At 80% Of Market Capitalization, 7% Dividend Yield A Tad Low

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<li>The company announced a settlement with its subsidiary of 18 mn HKD. This is material as we estimate that core profit for FY24 (June-end) would be 30-35 mn HKD. </li>
<li>This settlement will be paid in cash (tranches) as it involves<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0708/2024070801013.pdf" target="_blank" rel="noopener"> making the company whole on a </a>vendor's profit guarantee shortfall. It boosts cash and investments &gt;340 mn HKD. </li>
<li>The stock is cheap, with net cash almost equal to the market capitalization, an 11x PE (on core profit), and a 9% dividend yield. </li>
</ul>


The company announced a settlement with its subsidiary of 18 mn HKD. This is material as we estimate that core profit for FY24 (June-end) would be 30-35 mn HKD. 
This settlement will be paid in cash (tranches) as it involves making the company whole on a vendor's profit guarantee shortfall. It boosts cash and investments &gt;340 mn HKD. 
The stock is cheap, with net cash almost equal to the market capitalization, an 11x PE (on core profit), and a 9% dividend yield. 


UMP Healthcare (722 HK): Parsing the Announcement on The Major One-Time Gain

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<li>We preview <a href="https://www.smartkarma.com/entities/ump-healthcare-holdings-ltd" target="_blank" data-smartkarma-citation="entities:21005:1" rel="noopener">UMP Healthcare (722 HK)</a>  earnings for FY24 (June-end), which will be declared in September, and our outlook for FY25. </li>
<li>The company has more than 300 mn HKD of net cash (almost 75% of its market cap), and even assuming a 20% dividend cut, it has an ~8% dividend yield.</li>
<li>On core earnings for FY24, we estimate that the stock trades at 12x PE( ex-cash 2.8x PE), with low-hanging fruit from streamlining the business in FY25. </li>
</ul>


We preview UMP Healthcare (722 HK)  earnings for FY24 (June-end), which will be declared in September, and our outlook for FY25. 
The company has more than 300 mn HKD of net cash (almost 75% of its market cap), and even assuming a 20% dividend cut, it has an ~8% dividend yield.
On core earnings for FY24, we estimate that the stock trades at 12x PE( ex-cash 2.8x PE), with low-hanging fruit from streamlining the business in FY25. 


UMP Healthcare (722 HK): Deep Value Turnaround in FY25

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<li>
<a href="https://www.smartkarma.com/entities/ump-healthcare-holdings-ltd" target="_blank" data-smartkarma-citation="entities:21005:1" rel="noopener">UMP Healthcare (722 HK)</a> reported FY23 profits down 26% YoY at 55 mn HKD, impacted by preoperating expenses and an impairment cumulatively of 40 mn HKD. </li>
<li>A slow Q4 FY23 didn't help either; revenues came in flat HoH instead of up 10% as our expectations and costs increased resulting in margin compression. </li>
<li>We believe the worst is behind us. The stock trades at 5.9x FY24 PE, with ~50% of the market cap in cash and an FY24 dividend yield of 8.5%.</li>
</ul>



UMP Healthcare (722 HK) reported FY23 profits down 26% YoY at 55 mn HKD, impacted by preoperating expenses and an impairment cumulatively of 40 mn HKD. 
A slow Q4 FY23 didn't help either; revenues came in flat HoH instead of up 10% as our expectations and costs increased resulting in margin compression. 
We believe the worst is behind us. The stock trades at 5.9x FY24 PE, with ~50% of the market cap in cash and an FY24 dividend yield of 8.5%.


UMP Healthcare 722 HK: Weak Q4 Lead to A Disappointing FY23, Worst Behind Us

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<li>We held a conference call with the Chief Investment Officer of <a href="https://www.smartkarma.com/entities/ump-healthcare-holdings-ltd" target="_blank" data-smartkarma-citation="entities:21005:1" rel="noopener">UMP Healthcare (722 HK)</a>, Patrick Cheung, on the 19th of June, 2023. </li>
<li>The company continues to forge strategic alliances and collaborations, the latest being <a href="https://www.hkah.org.hk/en" target="_blank" rel="noopener">Hong Kong Adventist Hospital</a>, in addition to the recent partnerships with Pedder Health/Human Health Holdings (1410 HK).</li>
<li>The stock represents an excellent opportunity when trading at 6.6x PE FY23E with 44% of the market capitalization in cash and a 7.7% dividend yield on our numbers (50% payout).</li>
</ul>


We held a conference call with the Chief Investment Officer of UMP Healthcare (722 HK), Patrick Cheung, on the 19th of June, 2023. 
The company continues to forge strategic alliances and collaborations, the latest being Hong Kong Adventist Hospital, in addition to the recent partnerships with Pedder Health/Human Health Holdings (1410 HK).
The stock represents an excellent opportunity when trading at 6.6x PE FY23E with 44% of the market capitalization in cash and a 7.7% dividend yield on our numbers (50% payout).


UMP Healthcare Webinar Key Takeaways - Consolidation on the Investment Phase

Hong Kong

UMP Healthcare Holdings Ltd. offers healthcare solutions provider. The Company provides services for medical and dental needs. UMP serves both contract and plan customers.

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UMP Healthcare (722 HK)