SINGAPORE (June 5): Maybank Kim Eng is keeping its “buy” call on ophthalmology specialist ISEC Healthcare with a lower target price of 40 cents, from 42 cents previously.
With three centres in Malaysia and one in Singapore, ISEC provides competitively-priced eye surgery, care and consultancy services.
For the first quarter ended March, ISEC saw a 5% growth in earnings to $1.7 million, on the back of a 24% increase in revenue to $8.5 million.
In a report on Monday, Maybank analyst John Cheong says ISEC is set to tap into the positive trends of a rapidly ageing population which has led to eye disorders, better-educated patients who seek early treatment, and an underserved market in Malaysia where there is only one ophthalmologist per 100,000 population.
“Leveraging from its stronghold in Malaysia, ISEC is exploring more expansion opportunities in several markets with large population and rising demand for private ophthalmology services,” he adds.
According to Cheong, some of the markets that ISEC is eyeing include Vietnam, China, India, Indonesia, Myanmar, the Philippines and Taiwan.
However, with Malaysia accounting for 84% of the group’s total earnings in 2016, Cheong says ISEC risks translation losses if the ringgit suffers significant weakness against the Singapore dollar.
In addition, Cheong also sees a potential “key man risk” for ISEC as its largest shareholder, Dr Lee Hung Ming, remains the largest earnings contributor at close to 15% of the group’s earnings last year.
As at 12.57pm, shares of ISEC are trading flat at 34.5 cents.
