We see opportunity in TDM at current levels as the share price is trading at undemanding valuations of only a 13x PER despite the decent 1Q results announced recently. We maintain our Outperform call with a higher TP of RM0.85 after fine-tuning our numbers and rolling over our valuations to FY17. Despite weaker FFB production across the industry, TDM’s has been growing as its plantation area is less affected by the extreme dry weather condition. Riding on the FFB growth coupled with stronger CPO prices, we expect TDM to deliver a good performance this year
90% of its revenue comes from plantation segment n fully benefit from stronger CPO prices and is not affected by El Nino. healthcare only makes up 10% of its revenue, which is relatively small. The group has RM320m invested in high yield bond, generating RM33m, easily makes up 50% of the group's earnings. So easy.
“Currently, 70% of our revenue is generated by the plantation business, while healthcare contributes the remaining 30%. Both operations will grow their own revenue base but we will be aggressive in expanding our hospitals to improve our capacity,” chief financial officer (CFO) Amir Mohd Hafiz Amir Khalid told The Edge Financial Daily in an interview.
TDM, via its 90.49%-owned unit Kumpulan Mediiman Sdn Bhd, currently operates four “no-frills” hospitals, namely Kuala Terengganu Specialist Sdn Bhd, TDMC Hospital Sdn Bhd, Kuantan Medical Centre Sdn Bhd and Kelana Jaya Medical Centre Sdn Bhd.
As at end-2013, TDM had 204 beds. It plans to double this to 450 beds by 2016; by 2022, the figure will be upped to 700 beds through the acquisition of a “secondary care” hospital that has 80 to 150 beds.
“We will consider those with a similar ‘no-frills’ business model, where you pay for good care and not for luxury,” said Amir.
TDM’s annual average revenue for its healthcare business has leapt five-fold since 2004 to RM63.2 million from the RM11.9 million recorded in the six years between 1997 and 2003. This, said Amir, was due to a “quiet rehabilitation” since 2004, where it divested low-margin and loss-making subsidiaries — some of which were in the hospitality, travel and poultry industries — while it upped efficiencies.
Before 2007, all TDM hospitals were in the red due to increasing costs and operational inefficiency.
Amir said the turnaround came after the group started offering more affordable medical fees, which were lower by 10% to 25% than as scheduled under the Private Healthcare Facility & Services Act.
On TDM’s previously reported plan to list its healthcare business via Kumpulan Mediiman in 2016, Amir said that has been delayed to 2017 while the group focuses on its expansion plans.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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Posted by wakakaka88 > 2016-06-07 12:25 | Report Abuse
i dare...wakakaka..buy buy buy...wakakaka