DC Healthcare Holdings Bhd (0283) will be debuting on Bursa Ace Market today. DC Healthcare is an aesthetic medical services provider of Non Invasive and Minimally Invasive procedures. Its growth prospects are rosy, bolstered by (i) Growth from ambitious plans for expanding aesthetic medical clinics in Northern and Southern Malaysia; (ii) Full compliance with Letter of Credentialing and Privileging (LCP) Certified Aesthetic Physicians (CAP); (iii) further strengthening of aesthetic medical team. Riding on the projected aesthetic medicine market’s 6-years CAGR of 18.8% over 2021 to 2027, DC Healthcare is anticipated to surpass the RM100m revenue mark with net profit of RM11.8m and RM23.4m by FY23 and FY24. BUY with a TP of RM0.61 based on 26x PER over FY24 EPS of 2.3sen, aligning with Bursa Malaysia Healthcare Index’s 1 year forward PER.

We are optimistic on DC Healthcare’s expansion plans in the Southern Region (Negeri Sembilan, Melaka and Johor) and Northern Region (Perak, Pulau Pinang and Kedah), as it taps into the surging demand beyond the central region of Malaysia. The Company has earmarked RM9.4m IPO proceeds to set up an additional 8 new clinics (+62%) over the next 18 months. We believe this expansion will enable DC Healthcare to further diversify its customer base geographically, attracting non-Chinese customers and Singaporean customers.

DC Healthcare holds a significant market share within the local aesthetic medicine market, ranking as the top three with a share of 11.1%. Its full compliance with LCP practicians to provide non invasive and minimally invasive procedures has been widely preferred by consumers. The company offers a diverse range of services in both aesthetic and general medicine, with primary focus on facial and skin treatments, facial sculpting, body contouring, hair growth and removal, skin disease treatment, and blood test screening.

Managed by experienced LCP practicians (>7 years), DC Healthcare ensures consistent quality services to patients hence its attractions to new customers plus high customer retention rate that allows for further cross-selling of its services.

DC Healthcare plans to utilize one third of its IPO proceeds to recruit an additional 6 LCP CAPs, 16 resident medical doctors, 56 clinic consultants, and 16 administrative staff, aligning with its expansion plan. Strengthening the aesthetic medical team will enable the group to accommodate a higher number of treatments and improved operational efficiency.

Post listing, DC Healthcare’s net gearing ratio is expected to improve to 0.29x from 1.09x upon utilization of the IPO proceeds amounting RM6.2m to repay bank borrowings, which will result in interest cost savings, going forward.

Source: Rakuten Research - 17 Jul 2023

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