Making its debut on Bursa Ace Market today, Cengild is a specialised healthcare provider with medical expertise in diagnosis and treatment of gastrointestinal and liver diseases and obesity. It operates one medical centre located at Nexus Bangsar South Kuala Lumpur with current space of 35.5k sq ft. Post IPO Cengild will add 2 full fledged specialist medical centres in Johor Bharu and Penang or Ipoh. We forecast a 3-year net profit CAGR of 34% of RM15.6m for FY23. BUY with a target price of RM0.48 based on 25x FY23 PER which is at a discount to Malaysia’s listed healthcare peers given its smaller market capitalisation.

Started merely 5 years ago, Cengild’s revenue has grown exponentially from RM11.68m in FYE2018 to RM63.47m in FYE2021, thanks to the pool of highly experienced medical consultants and officers. Founded by Dato’ Dr Tan Huck Joo, being the largest shareholders and 5 other medical consultants, they possess an average 30 years of experience within the medical field. Added to the 6 reputable founders being the employee consultants, Cengild houses another 5 resident consultants, 17 visiting consultants and 1 visiting medical officer.

Of the RM72.2m IPO proceeds raised, RM13m will be used to expand its current operating space by adding 3 endoscopy rooms, 2 counselling rooms and expands the inpatient ward. Whereas RM37.1m is earmarked for 2 new full fledge medical centres with each of the centre having 2 endoscopy room, accident emergency department, 5 outpatient clinics, radiology room, an operating theatre and other facilities. The inpatient beds and daycare beds will increase to 60 and 39 respectively post expansion. In line with the expansion plan, Cengild has allocated RM15.8m to hire professionals to join its medical team.

Cengild has partnerships with insurance companies such as AIA Great Eastern, Allianz etc. This gives Cengild wider access to patients who required quality healthcare services by facilitating cashless treatment in the form of guarantee letters from the insurance companies. It also partners with third party administrators which offer patients from Indonesia to seek medical treatment in Malaysia. As at FY21, foreign patients contributed 3.2% to its total revenue but we estimate its contribution to increase upon relaxation of international travelling.

We expect Cengild to register net earnings of RM13.1m, RM15.6m and RM30.6m for FY22-FY24 respectively. Cengild targets a dividend payout of at least 25% as such we forecast dividend yields to be at 1.4% and 2.8% for FY23 and FY24 respectively. It will turn into a net cash company post IPO with pro forma cash balance of RM72.5m.

Source: Rakuten Research - 18 Apr 2022