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Singapore O&G expands spectrum of healthcare services for long-term growth

Candace Li
Candace Li • 7 min read
Singapore O&G expands spectrum of healthcare services for long-term growth
Many investors relate SOG’s business to the delivery of babies. But O&G specialists provide more than just that.
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1. Describe Singapore OG’s recent financial performance.

Established in 2011, Singapore O&G (SOG) is a healthcare service provider dedicated towards delivering premier medical services to women’s and children’s health and wellness at affordable prices.

The group’s clinics, under its four operating segments — Obstetrics and Gynaecology (O&G), Cancer-related, Dermatology, and Paediatrics — are strategically located in Singapore to provide easy access to its patients.

SOG has posted stable revenue growth over the years since our IPO in 2015. Our profit from operations has doubled from $6.1 million in 2015 to $12.5 million in 2019.

Despite the Covid-19 pandemic, coupled with the suspension of non-essential medical services in April and May 2020, the group posted revenue of $17.9 million for 1H2020 which is a slight decline of 4.2% as compared to $18.7 million in 1H2019.

This is largely attributed to the performance of our O&G and Paediatrics segments. During this challenging time, the group posted a net profit after tax of $3.8 million for 1H2020 (which is a decrease of 21.4% from $4.8 million in 1H2019).

The group paid out an interim dividend for 1H2020 of 0.50 Singapore cents per share, maintaining a dividend payout ratio of about 62% of the group’s net profit after tax.

2. Can you provide a breakdown of SOG’s revenue mix? What would you change or maintain in terms of this structure?

SOG has a long and established track record in the O&G segment, which provides pre-pregnancy counselling, delivery, pregnancy and post-delivery care.

The group has expanded its spectrum of healthcare services in recent years to include gynaecological and breast cancer, skin and aesthetic treatments, and paediatrics.

Our O&G specialists provide a comprehensive suite of services catering to the health of the female reproductive system, throughout a woman’s life cycle, from fertility planning, general gynaecology, gynaecological surgery, female pelvic medicine, urogynaecology and reconstruction surgery, high intensity focused ultrasound (HIFU) treatment for uterine fibroids and adenomyosis.

As we continue to strengthen our O&G base and increase market share, we will also grow our other business segments organically or through M&A.

3. How have SOG’s operations and key services transformed since IPO to-date?

We started with just our O&G business segment when we first listed in 2015. Over the last five years, the group has grown and expanded to provide a more comprehensive range of services to cater to both women’s and children’s health and wellness.

Today, we have four business segments. Our largest segment, O&G, contributes 56.7% of our revenue while the other three segments collectively make up 43.3% of our revenue in 1H2020. The group has grown from six clinics at IPO to 15 clinics as of end-2020.

The group’s revenue has also increased from $16.4 million in 2015 to $39.8 million in 2019

4. Can you elaborate on your strategy to invest in and equip your medical practitioners with the right tools and skills to remain at the forefront of the latest medical practices and technologies?

We provide mentorship for our junior specialist medical practitioners so that they can tap our pool of experienced senior specialist medical practitioners to further strengthen their skills and expertise.

We also invest in our practitioners by providing them opportunities to attend medical conferences, webinars and training locally or overseas. This helps to keep them abreast of the latest advances in medical practices and technologies.

In recent years, four of our O&G specialists have also successfully completed their HIFU training in Chongqing, China, which is a non-invasive and organ-sparing procedure that uses focused high energy ultrasound waves to destroy uterine fibroids.

The SOG HIFU team, led by Dr Lee Keen Whye and comprising Dr Beh Suan Tiong, Dr Hong Sze Ching and Dr Clara Ong, make up the pioneer batch of gynaecologists who are qualified to perform HIFU treatments in Singapore.

5. What is SOG’s strategy to attract and retain talent (i.e. its specialist medical practitioners) within the group? How will it impact operating expenses in the medium to long term?

In addition to providing our talents a solid framework for growth and development, we believe SOG’s strong brand, network and reputation puts us in good standing when it comes to negotiation.

Coupled with our fair and transparent remuneration compensation, we have been able to attract and retain the right-minded talent with similar values to the rest of the group. SOG also practices upward revision of our talent’s remuneration packages (in accordance with their years of service, experience and specialty knowledge in their field) as part of our overall strategy for talent retention.

6. Currently, SOG’s operations are focused on the Singapore market. Does it plan to expand abroad to take advantage of rising demand for healthcare services in the region?

We have always been exploring opportunities for partnerships and collaborations overseas. However, we remain cautious and practice prudence in our evaluation when identifying the right business partners.

Currently, we have a collaborative arrangement with Monash IVF which operates in-vitro fertilisation (IVF) centres in both Kuala Lumpur and Johor, Malaysia.

This arrangement allows our patients to simply cross the border, to seek IVF treatment at a lower cost as compared to Singapore.

7. What are the factors that are critical to SOG’s success in this competitive landscape?

Through the years, SOG has managed to build a strong reputation associated with quality specialised healthcare, medical treatments and patient care and service in the market.

It is through the trust of our patients and their word-of-mouth referrals, that have enabled us to steadily gain market share. In addition, we are also constantly making improvements to our service offerings and patient care standards — adjusting according to market demands and feedback from our patients.

These practices have enabled us to remain relevant and competitive in this landscape. Finally, as mentioned earlier, we aim to ensure that our specialist medical practitioners and clinics are updated with the latest medical knowledge and equipped with the right skills and technologies.

8. Birth rates have been declining in Singapore in recent years. How will this trend affect SOG, given that the O&G business is the biggest segment of the group’s business?

Despite the declining birth rate in Singapore, SOG has achieved a 9% (161 babies) increase in deliveries in 2019 as compared to the preceding year. The group delivered 1,985 babies in FY2019 as compared to 1,824 babies in FY2018.

In FY2019, the group delivered 9.5% (FY2018: 8.9%) market share of the private sector healthcare market.

We believe the support given from the Singapore government to provide assistance and encouragement to couples to get married and have babies early have helped to increase the number of live births in Singapore, contributing to our overall increase in deliveries last year.

9. Describe SOG’s ESG strategy.

Our sustainability efforts are led by the board of directors and senior management who ensure that the company’s business objectives remain in line and committed to sustainable development.

SOG’s ESG strategy is developed from our sustainability value model comprising four key components: economic — shareholders; legal compliance & corporate governance; social — employees and community; and environmental.

10. What do you think investors may have overlooked about SOG’s business?

Many investors relate SOG’s business to the delivery of babies. However, our O&G specialists provide more than just the delivery of babies. They provide a comprehensive suite of services catering to the health of the female reproductive system, throughout a woman’s life cycle. Over the years, our business has also expanded from just one medical segment to four.

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