ACE Market-bound DC Healthcare Holdings Bhd launched its prospectus on Tuesday (June 22), with an initial public offering (IPO) price of 35 sen, implying a market capitalization of RM 49.81 million upon its tentative listing on July 17. Here is the highlighted Q&A from the company management team (Director and CFO)

Here is the original transcript from the Zoom meeting of RHB Research New IPO Briefing: DC Healthcare Holdings Berhad on 28 June 2023.

Q: Firstly, there is a question here from the participants, what’s the DC healthcare competitive edge

A: The competitive edge of DC healthcare, let me elaborate a bit more. The first thing is that we have a big team and a strong experience team of LCP-certified aesthetic physicians with us, we have a total of 10 LCPs ( Letter of Credentialing and Privileging Medical Practice) with us which is also further supported by another 29 resident medical doctors and all our machines and also products including the whole team in DC healthcare buildings. All of us are fully certified and registered under the Ministry of Health (MoH, the KKM). In aesthetic medical practice, our industry is actually a highly regulated industry, a very tightly controlled industry by the MoH, so all the products and machines are fully registered by either the FDA or MDA (Malaysia Device Act approved). So we are very proud that as a healthcare provider, all the products of machines or equipment that we use will deliver a direct impact or positive impact the health especially when we are talking about aesthetic skin health or the health of the hair follicles on our patients, and all our clinics and product will fully complain to all the rules and regulation set by the MoH. Besides that, we also have a very good track record and also extensive marketing strategies so we have very good exposure and also high customer liking across all the branches and we have 13 branches in the central region in Seremban as well as in Johor. Our distribution has given good accessibility so our patients or our customers can easily access any of our outlets without any major problem.

Q: Alright, and there’s another question here: what's the difference between the LCP doctor and the resident medical doctor?

AL This is a very good question. Actually, LCP is rather special and probably not a very familiar term to many because the aesthetic medical industry is a niche industry and this term is actually used to describe probably a layman term a special licence for doctors to practise aesthetic medical practice. Probably it will be good for us to explain a little bit on the roadmap about how a person can be an LCP-certified aesthetic physician so for example if someone is interested to be a LCP-certified doctor, the first thing to do is an undergraduate study in a medical degree so probably a 5 to 6 years study undergraduate and BBS or MD. After that, the doctor needs to go through the internship or housemanship for 2 years by the approved hospital if they get a posting on time so with the minimum 2 years. After they have passed through the internship, they need to go through the compulsory government service for approximately 2 to 3 years. If that doctor, after all these years of undergraduate studies, 2 years of internship, and another 2 to 3 years of compulsory government service, if they are still interested in grating into the specialty of aesthetic medicine, this doctor has to quit government service and join the private sector to get the training. This is rather special because LCP training in aesthetic medicine cannot be done in the government sector, they have quite a government sector and join the private sector and start their training and apprenticeship under LCP-certified aesthetic physician so this training minimally will be 2 years, some may be longer. After this training, if the trainer (LCP doctor) thinks that he or she is qualified then they will sign off the lot book and recommend them to MoH to get the LCP certification and this is the rough roadmap. So today, there are a limited number of LCP doctors in the country. This is something that we are proud of because we have 10 doctors with us. Besides that, we have 29 resident medical doctors undergoing training under our group and they will get their LCP certification in the years to come. In fact, this year we are expecting at least a few doctors to get the LCP certification and many more to come in the months to come. We have a total of 29 resident medical doctors in our training, and we will eventually get their LCP, so these are rough differences between LCP doctors and our resident medical doctors.

Q: Seems like a long processor to be a LCP doctor. So doctor Chong do you have any strategy to retain all these LCP doctors?

A: Yes, talent intention is one of the most important things to do. Firstly, just for clarification, currently, under our group, we have 10 LCP doctors with us, and actually all these 10 we have still 2 unutilized licenses, 2 doctors whose licenses will be utilized for our future opening which is actually underway so out of the plan of the 8 LCP certified clinics that we have currently we already have in-house 2 doctors with the license ready. Besides that, we are also actively recruiting new doctors, and new LCP doctors to join us with our listing status and a good reputation and track record, we believe it will be at a competitive advantage that we have to attract more talents. The most important thing is that in our own pipeline, we have 29 doctors getting the LCP very soon within these 3 years and there are actually quite a few within these few months. Also, some have really just gotten it and some may get it within a few months or a few years time. So this one we are also training our doctors under our group and under our own training I think after they get the LCP certification they can fit into our company with our own way of doing things and fit the corporate culture very well.

Q: Okay. Looking at your perspective, I see that now you are expanding your centers to the Northern and Southern regions, so do you have any plans to go to East Malaysia? I think it refers to Sabah and Sarawak.

A: Currently in this short term, we are planning to open 8 new medical clinics, these 8 medical aesthetic clinics we are expanding our presence out of Klang Valley, we are going to expand to the Northern and Southern regions of the peninsula Malaysia. After this, of course, we are still eyeing other opportunities as suggested in East Malaysia. We also see opportunities as well.

Q: There is another question: currently, how many foreigners are your customers? I saw that currently, you have a JB branch (JB branch to attract SG customers)

A: This is actually a very good question, one thing is that our classification is slightly different where we do not classify according to the nationality of Malaysians and also tourists. Just for your information, if you look at the prospectors one of them is actually we are putting the revenue according to the geographical location we divide into the central region and southern region. The central region included Klang Valley and Seremban, while the Southern region is actually our Johor branch. As in our Johor branch, we have quite a number of Singaporeans coming to us. In actual fact, in the central region as well, we have quite a number of foreigners so I think both the central region and Southern region we are serving quite a certain percentage of the tourist or the other nationalities that are staying in Malaysia probably long term or medium term

Q: All right, understand. There is another question, can a doctor perform aesthetic services without the LCP certification?

A: Okay, according to the law and rules and regulations set by MoH, all aesthetic medical procedures must only be performed by LCP-certified aesthetic physicians or under the direct supervision of LCP-certified doctors. Resident medical doctors can perform either under supervision or under LCP-certified aesthetic physicians. So we do understand that actually out of this aesthetic medical practice, there are a lot of other practices in different industries that probably a lot of people may have question marks but actually the rules and regulations set by MoH have already clearly stated all aesthetic procedures including laser, injection and automation, we have dividend into the invasive, non-invasive and minimally invasive procedures but all these three categories are compulsory to be carried out only by doctors with the LCP certification.

Q: Understand. There is another question: what type of industrial risk do you foresee?

A: I think the risk factors of our group, one of which is actually we are in this healthcare service industry, we are dependent on LCP-certified aesthetic physicians and as well as other supporting staff including our resident medical doctors. This is one of the risk factors, and of course, our company has taken the necessary steps to medicate these risks as mentioned just now. First, we provide good remuneration and we have a good talent retention program for our doctors, especially our LCP-certified doctors. That’s why you can see 10 doctors currently joining us in the group instead of going through other centers over their private practice. The second thing is we are also actively training these 29 resident medical doctors under our group for this purpose so after the training, they will get their LCP certification. This program is not new, we started it many years back so we are expecting many to get the LCP in the very near future.

Q: Okay, I think talent is one of the needs in this industry, so speaking about what comes to my mind is technology, we know all these aesthetic technologies keep changing over time. So for DC Healthcare, how do you cope with these changes in technology?

A: Technology is one of the most important things that we are always looking for opportunities to look for any new technologies or new products so usually our group what we do is that we have our in-house sales and marketing team who actively do a bit of research to understand what is the latest trend, the latest technology, we were probably not only just doing online, our own group especially our medical director will actively train ourselves and attend conferences, workshop or even training locally or internationally to look for any new technologies. The whole process of getting these new technology coming to our country or to be used in our group is slightly more tedious I would say, but it’s something that we are currently doing so what we do besides understanding more we will also send our doctors overseas for training or even for the local training, after that the other thing that we must also check is the full approval given by the MoH on that certain of particular products or technology. Once this approval is given then yes we will get these machines to be used in our group for the best benefit of our customers.

Q: When I look at your prospectus, some of the machines that you are using now are each between 3 to 5 years, can I safely say that the technologies will have a big change every 5 years, which means you need to invest in the new equipment again? Can I say 5 years is a rough number?

A: Probably longer. We are in a high regulator industry including overseas for example in the US, this is actually tightly controlled by the US FDA. So all machines even though new technologies have come out the whole clinical trial cannot be skipped so when we have new technology when everyone is excited usually at the same time clinical trials are actually underway in the US or UK or in Europe or probably in Korea. So this one usually will take out quite a few years after all these clinical dates and trumps have shown us the positive benefit then only the local authority (MoH or KKM) will start studying and start to give approval. After getting this, then we will start using it, and the machine's life will be slightly longer than 4 to 5 years. Because of the paradigm shift to lasers, it takes some time for technology to come through but again we are not talking about 2030 years where technology in aesthetics is actually rapidly evolving.

Q: There is another question, you are operating in a highly competitive industry and that may be some price war going on. How do you actually defend your pricing so you can keep your margin, do you have any strategy on this?

A: Yes, pricing policy is something that we are also concerned about. The first thing is that we are quite different from our competitors. There are quite a few competitors out in the market but let me focus on our unique selling point of Doctor Chong Clinic, the first thing is that we are hundred percent fully complying with all the rules and regulations set by MoH and that’s the reason probably we are the first and only aesthetic clinic chain going to be listed in Bursa Malaysia. The Enforcement Union of MoH has been active in our clinic. They are doing very regular visits to our clinic to make sure everything is in order. Secondly, we are also focusing only on non-invasive and minimally invasive procedures meaning all those high-risk and invasive procedures that are not in the scope of our services. That’s why our group until today, we are lucky and I think is within our control and a good understanding of our patients we have not even a single legal case involving the group and this is not just a coincidence, this is actually through the good planning and also the corporation of all our doctors and also their professional skills and judgment. So compared to other groups, these are the things we can fully reassure all our customers to get safe and reliable treatments with us. Compared to other groups as well, we have a very good geographical location where we can serve more customers at different locations because, in the aesthetic market, the majority of the players are actually stand-alone clinics and that is slightly different from our group.

Q: Can we have an idea of what your market share is in the market now and also post a listing?

A: Okay. We refer back to the year 2022 when the whole market size of Aesthetic Medical Practice is approximately 468 mil. DC Healthcare Holdings we have a registered revenue of 52 million which is 11% of the market share. Moving forward, the whole aesthetic medical industry actually has got a very good future with a CAGR of 18.8%, and these the whole total market size will go beyond RM 1 bil in 2027, we are actually very positive about the growth of the whole aesthetic market and with our listing status and also the fund for us to grow, we believe the group can progress very well in the future.

Q: In the prospector, I have seen that to have 1 clinic you need about 6 - 9 months because you have some certifications, renovation works, and things, so can you give us a timeline are you going to open the 8 clinics at one short post listing or how many clinics you are gonna have this year and then how many clinics you gonna have next year? Any schedule for that?

A: Sure, we are planning to open these 8 clinics throughout the period of 18 months and we have also elaborated on these where in our prospectors where we plan to open 2 branches in Johor by September to November probably before Q4 of this year and also we are planning to go into Melaka, Negeri Sembilan by December, we are planning to go to Penang, Perak, and Kedah in the year 2024.

Q: Could you give us a closing remark to all these potential investors?

A: Sure, first thing is that actually, we are very proud to be the first aesthetic clinic group to be listed on Bursa Malaysia and this IPO exercise will allow us to expand our reach to the northern and southern regions of the peninsula Malaysia with additional 8 new clinics within 18 months. We have a proven track record of seven years from the humble beginning of our first clinic in Kepong, Kuala Lumpur until today we have 13 clinics and we have 10 LCPs our certified Aesthetic physicians with us, assisted by another 29 resident medical doctors who will be getting their LCP certification very near future. The commitment to providing quality service and safe medical procedures includes carefully customized aesthetic treatment procedures together with stringent safety controls and these have helped the group to grow our customer base this is also very important to the group with the growing acceptance of aesthetic treatment and is getting more and more popular, the domestic aesthetic medical services are projected to continue to grow tih a CAGR 18.8% and will go beyond RM 1 bil in 2027. There’s no doubt that this kind of continued growth and also improvement in disposable income and affluence in the aesthetic medical market will remain very resilient and there’s is a lot of room to grow in the mid and long term and by this, I would like to take this opportunity to thank everyone again and forward, tuning into this retail briefing and thank you the RHB research team for having us on a platform to speak our upcoming IPO.

​IPO - DC Healthcare Holdings Berhad (Part 1)​

​IPO - DC Healthcare Holdings Berhad (Part 2)​

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