Econ Healthcare (Asia) Limited (SGX:EHG), a private nursing home operator in Singapore and Malaysia, made its debut on the SGX Catalist. It currently operates 10 medicare centres and nursing homes in Singapore, Malaysia and China, with the establishment of Chongqing Nursing Home, which is expected to commence operations in 2021.
Tapping on the increasing demand of nursing homes and senior care services, Econ Healthcare secured their expansion pipeline for their near-term growth, venturing into China with the establishment of Chongqing Nursing Home expected to commence in 2021 and securing rights to operate two upcoming medicare centres and nursing homes in Singapore (located at Henderson and Jurong East).
While Econ Healthcare does not have a fixed dividend policy, the Board intends to distribute at least 35% of its net profit after tax attributable to shareholders generated in each of FY2021, FY2022 and FY2023.
With a track record of 30 years, Econ Healthcare (Asia) Limited primarily provides residential nursing care, home care, rehabilitation, clinical as well as Traditional Chinese Medicine services in 10 medicare centres and nursing homes in Singapore, Malaysia and China, with the establishment of Chongqing Nursing Home, which is expected to commence operations in 2021.
Econ Healthcare - Company Background
Founded and led by Mr Ong Chu Poh, Executive Chairman and Group Chief Executive Officer, Econ Healthcare established their first medicare centre and nursing home in Malaysia in 2004. As at the Latest Practicable Date (12 March 2021), Econ Healthcare operates 10 medicare centres and nursing homes in Singapore and Malaysia, with a total bed capacity of 1,376. After the necessary licences and approvals are granted, Econ Healthcare is looking to commence operations in China under the Chongqing Nursing Home in 2021.
Econ Healthcare offers an eco-system of care and provide a wide range of services encompassing aspects of eldercare to support families and it strives to be the centre of excellence for Eldercare in Singapore and Malaysia. Econ Healthcare won several accolades over the years, including the first nursing home industry to be awarded the Singapore Service Class Certification, and 46 awards from the Silver, Gold and Star award categories at the Singapore Health Quality Service Awards in 2020 presented to employees.
According to Euromonitor, Econ Healthcare is the largest private nursing home operator in Singapore and Malaysia by revenue with a market share of 26.9% and 43.2% respectively.
In Singapore, Econ Healthcare has also been appointed as an operator under the Build-Own-Lease (BOL) scheme for two upcoming nursing homes – ECON Medicare Centre and Nursing Home in Henderson and Jurong East – which will increase total bed capacity from 1,376 to 2,388 by 2025. The Group has an average of 1,094 residents (in 6M2020) and average occupancy rates of 94.1% in Singapore and 75.5% in Malaysia as at 30 September 2020.
Econ Healthcare operates 2 key business segments:
- Medicare Centres and Nursing Homes
- Residential nursing care services.
- Rehabilitation Services and Traditional Chinese Medicine (TCM) treatments.
- Clinical services.
- Home care services.
- Other Operations and Ancillary Services
- Healthcare training services.
- Provision of management services.
- Ambulance services.
- TCM services.
- Operation of senior activity centres.
Econ Healthcare's Competitive Strengths:
Econ Healthcare believes that it has competitive strengths in these areas, namely:
- Leading private nursing home operator, well positioned to capitalize on the growing ageing population in the region.
- “Econ” brand name is well-recognised and trusted with a track record of award categories, and strives to be a Centre of Excellence for Eldercare.
- Strong operational know-how and track record of 30 years.
Econ Healthcare's Business Strategies and Future Plans
Asset-light strategy to scale up future expansion: Through (i) leasing premises at locations deemed appropriate for centres and homes and entering into leasing agreements to operate such facilities at these locations, and (ii) Partnerships with landowners who will bear the cost of constructing buildings.
Expand business operations organically through strategic collaborations:
Singapore: BOL Scheme is a key strategy of the Singapore Government to increase nursing home bed capacity by bearing development costs and tenders the operating rights to both private and voluntary welfare organisations (VWO) operators. Being the first private operator to be appointed by MOH under the BOL scheme in 2011, Econ Healthcare will continue to participate in tenders for such opportunities.
Malaysia: Continue to source for strategic locations for centres and homes due to lower costs compared to Singapore. According to Euromonitor, Malaysia will be one of the top 10 retirement destinations in the World. Econ Healthcare will also explore opportunities with developers and investors to develop an existing land plot in Cheras which it owns into a senior care hub.
China: Econ Healthcare will explore opportunities to provide healthcare and eldercare training services to healthcare professionals in China. Leveraging on the inter-government China-Singapore (Chongqing) demonstration Initiative on Strategic Connectivity, Econ Healthcare has entered into and/or are in advanced discussions to enter into join ventures with local partners.
Enhance productivity through human capital investment, and technology and innovations: Autonomous mobile robots, indoor positioning technology integrated with fall detection and an integrated system for seamless care transitions and integration of care with community care partners are examples of technology innovations that Econ Healthcare is involved or plan to invest in.
Upgrading of existing facilities: Econ Healthcare plans to upgrade existing facilities and equipment used at centres and homes to improve their service environment, service quality and service productivity simultaneously to achieve a holistic care for residents.
Econ Healthcare's Key Risks
- Business operations are subject to extensive and evolving government laws, regulations, licensing and accreditation requirements, and the Group could suffer penalties, additional costs and restrictions to its operations if it fails to comply.
- Subject to various licensing requirements and its licences are subject to regular renewal, and the Group may not be able to obtain, maintain or renew such licences on a timely basis or at all.
- The Group may be materially and adversely affected by spread of diseases or an outbreak of any contagious or virulent diseases and pandemics/epidemics.
- (See Page 26 of the Offer Document for more risk factors)
Econ Healthcare's Financials & Recommended Dividends
- Econ Healthcare’s aggregate revenue and operating subvention grants increased by 1.0% from S$37.0 million in FY2019 to S$37.3 million in FY2020, due to a 0.5% increase in Medicare Centre and Nursing Home fees in Singapore and operating subvention grants as the average bed occupancy in Singapore increased.
- The Group does not have a fixed dividend policy. However, the Board intends to recommend dividends of at least 35% of net profit after tax generated in each of FY2021, FY2022 and FY2023.
Econ Healthcare's IPO details
- Offering price at S$0.28 per Offering Share.
- 50.0 million Offering Shares which consist of:
- 48.2 million Placement Shares.
- 1.8 million Public Offer Shares.
- Estimated IPO market capitalisation at S$72.0 million.
- Use of gross proceeds (S$14.0 million):
- S$7.5 million – Expansion plans in Singapore as well as overseas through, among others, joint ventures, strategic collaborations, mergers and acquisitions, or investments.
- S$2.0 million – Upgrading of existing medicare centres and nursing homes and other facilities, including equipment and IT infrastructure.
- S$2.0 million – General corporate and working capital purposes.
- S$2.5 million – Payment of underwriting and placement commissions and offering expenses.
More Information in Econ Healthcare's Offer Document.
📢 Econ Healthcare (SGX:EHG)'s IPO balloting results: The 1.8mil Public Offer Shares is 86.9x subscribed. Together with the 48.2mil Placement Shares, total offering of 50mil Shares is ~4.1x subscribed. Trading of Econ Healthcare shares to commence on 19 April 9am. #EconHealthcare #SGXIPOPosted by SGinvestors.io on Friday, April 16, 2021
Econ Healthcare (SGX:EHG)'s day 1 trading on SGX Catalist: IPO: Offering of 50mil shares at S$0.28 per share. Total outstanding shares: 257mil. Day 1 Open: S$0.285; Day High: S$0.30; Day Low: S$0.285; Last Done: S$0.29. Day 1 Turnover: ~S$4.82mil. ~16.6mil shares changed hands at average trading price of ~S$0.2903. ~23k shares short sell at average price of ~S$0.289.Posted by SGinvestors.io on Monday, April 19, 2021