Cengild Medical (CENGILD | 0243)

Last Price: RM0.28 | Technical Call: BUY

Company Background. Cengild Medical (Cengild) is a healthcare service provider operating a medical centre, namely Cengild G.I. Medical Centre, in Kuala Lumpur, Malaysia. The group specialises in the diagnosis and treatment of gastrointestinal and liver diseases, as well as obesity. The medical centre boasts state-of-the-art facilities, including 36 licensed beds, 2 fully equipped operating theatres, 3 endoscopy suites, and advanced imaging equipment such as Broscan, ultrasonography, CT scans, fluoroscopy, and angiography equipment for ERCPs and other procedures.

Prospects. (i) A 100,442 sq ft facility has been acquired to enhance core specialties in gastroenterology & hepatology, alongside urology, oncology, cardiology, and gynaecology. This strategic move aims to increase operational capacity, boost patient intake, and strengthen medical expertise to provide comprehensive care, (ii) Plans are underway to establish new medical centres in major cities across Malaysia as part of a long-term growth strategy, (iii) Efforts are focused on attracting and recruiting consultants and surgeons specializing in gastroenterology & hepatology to expand the medical team, and (iv) A dividend policy with a minimum 25% payout ratio has been adopted, balancing shareholder returns with capital reinvestment requirements.

Financial Performance. In 1QFY25, Cengild posted higher revenue of RM22.3mil (+26.6% YoY) with a PAT of RM4mil (+11% YoY). This was mainly due to an increase in patient volume, improved operational efficiency, and an increase in the number of endoscopic procedures and surgeries performed.

Valuation. Cengild is currently trading at a 20x trailing P/E, which is lower than the Bursa Healthcare Index's 5-year forward average of 25x. In comparison, TMC Life Sciences, which operates a multi-disciplinary tertiary care center, a fertility center, and Thomson Hospital Kota Damansara in Malaysia, trades at a much higher trailing P/E of 31x.

Technical Analysis. We expect further upside for Cengild given that it has successfully taken out the 2-year major downtrend line yesterday. With the 20-day and 50-day EMAs currently converging and likely to form a bullish crossover soon, the stock appears positive in the near term. A bullish bias may emerge above the RM0.275 level with stop-loss set at RM0.25, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM0.325, followed by RM0.35.

Entry: RM0.275-0.28

Target: RM0.325, RM0.35

Exit: RM0.25

Source: AmInvest Research - 27 Nov 2024