TMC Life Sciences Berhad (TMCLS) is a growing financial healthcare group that’s been listed on the Main Market of Bursa Malaysia Securities Berhad since 2005. It operates an integrated healthcare platform that owns a hospital division, TMC Fertility Centre, and TMC Care Pharmacy. Its holding company, Thomson Medical Group Limited, is listed in Singapore.
Under the hospital division, its flagship hospital, Thomson Hospital Kota Damansara (formerly known as Tropicana Medical Centre) has a capacity of 205 beds. It employs more than 100 consultant specialists and can cater to over 21,000 admissions annually.
Construction of another flagship hospital, Thomson Iskandar Medical Hub is currently under way in the proposed Vantage Bay Healthcare City in Johor Bahru which is located near the Johor-Singapore Causeway.
TMCLS looks poised for its next phase of growth and I was interested to learn more about the company’s direction in the short to medium term. Therefore, I took the opportunity to attend in its 2019 annual general meeting.
Here are 10 things that I learned from the 2019 TMC Life Sciences AGM:
1. Revenue has grown steadily from RM86.5 million in 2014 to RM169.0 million in 2018 at a compound annual growth rate (CAGR) of 18.23%. TMCLS’s revenue rose by 11.4% from 2017 to 2018. The hike in revenue was due to the rise in the number of admissions, outpatients, and surgeries.
5. A shareholder asked about the potential customer base in Johor Bahru and the recruitment of specialist doctors there. The CEO responded that Thomson Iskandar Medical Hub would serve not just Johorians, but also patients from surrounding states and Singapore. The medical hub is a five-minute drive from the Johor-Singapore Causeway and Singaporean patients will also be allowed to use their MediSave account (Singapore’s national medical savings scheme) at the medical hub. TMCLS will also consider hiring Malaysian doctors who currently work in Singapore and Singaporean doctors provided with special permits. TMCLS can also refer patients from Singapore to fertility clinics in Johor Bahru and foresees referrals to grow in the future once the system is in place. Healthcare in Johor is still underserved in general.
6. As a response to a shareholder’s query, Quek mentioned Thomson Hospital Kota Damansara expansion would require approximately a three to five-year ramp-up period, which is typically shorter than what a new hospital would need. At the present stage, the number of outpatients are not affected by the construction. On average, the bed utilisation rate stands at about 70%. Two hundred beds will be fully operationalised within the first year after the completion of the expansion.
7. Shareholders were surprised to hear the announcement about changes in TMCLS directorships a day before the AGM. Two executive directors and two independent non-executive directors would be appointed to the board on 25 January 2019, and Wan Nadiah Binti Wan Mohd Abdullah Yaakob would replace Quek as the next CEO starting 1 February 2019. Quek demonstrated confidence in Nadiah and said that the changes were essential to bring in local expertise to own the Malaysian operations and as part of TMCLS’s succession planning.
8. A shareholder expressed his worry that TMCLS only had slightly above RM200 million in cash to fund the construction works. Quek reassured the shareholder and pointed out that TMCLS was still an income-generating business and could raise an additional RM650 million once warrants were exercised. It also has additional financing facilities from local banks. In addition, its parent company in Singapore has an outstanding warrant exercise that can raise up to S$850 million. It is worth noting that TMCLS has sufficient funding alternatives to absorb the construction costs, but the warrants will dilute share ownership upon exercise.
9. The management does not intend to venture into the confinement care business for now. Profitability of the confinement care business remains questionable as mothers here tend to stay home with their family and domestic helpers, but the opportunity may be explored in the future with a partner. The management recognises TMCLS’s core competency in reproductive treatments such as in-vitro fertilisation (IVF) and will focus on increasing its market share within the reproductive treatment circle.
10. The CEO believes that demand for private healthcare will remain strong despite a slowdown in global growth as people generally go for the best healthcare services they can afford. Medical tourism remains steady as approximately 10% and 20% of patients in its hospital division and facility centres respectively are foreigners. He added that healthcare is a people business and not just about maintaining a transactional relationship with patients. This relationship-building is crucial for TMCLS to stand out from its competitors.
https://fifthperson.com/2019-tmc-life-sciences-agm/
