Dr Ong Fung Chin started her family clinic in 1994. Besides treating everyday ailments, Ong, who also has a postgraduate qualification in dermatology, soon gained a reputation for treating certain skin conditions such as acne and eczema.
What differentiates Ong from the dermatology specialists is that she prescribes medication to manage certain less severe skin conditions while recommending skincare products to supplement skin recovery.
By operating one of Singapore’s few family-practice dermatology clinics, Ong offers more than a regular general practitioner (GP), yet can be more affordable than dermatologist specialists. Her reputation grew within the community, and she quickly found a growing demand for her services — to the point that in 2005, her husband, Cheng Shoong Tat, left his high-flying career with various large local corporations to join the company full-time.
“Back then, we hopped on a trend in the US to integrate medical skincare products with a medical treatment regime,” says Cheng, Niks Professional’s chairman and CEO, in an interview with The Edge Singapore. “We believe that we could be among the first in Singapore to do this,” adds Cheng, who in 1979 was the first President’s Scholar from Temasek Junior College.
In the late 1990s, the range of medical skincare products in the market was limited, and Ong felt that the width and breadth of the products in the Singapore market did not allow her to individualise prescriptions to her patients properly. The idea of developing her products came about, and the husband-and-wife team went to the US to search for partners to develop the needed products.
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Cheng explains that as the portfolio of Niks Professional’s medical skincare products grew rapidly, along with the strong demand, the company started to branch out into the aesthetic medicine space, providing injectable fillers, laser treatments and aesthetic facials. The company also opened up its beauty salon, offering facial treatments. In addition, Niks Professional started introducing its products in China, where it has built up a network of 11 regional sales agents, selling to healthcare facilities, doctors and consumers in 13 provinces.
The company generates the most revenue from its clinics in Tampines, Jurong East and Orchard. All three clinics treat patients with skin issues, performing procedures like chemical peel, subcision (a surgical procedure that is used to treat acne scars) and mole removal, and offering aesthetic injections. The Orchard outlet at The Centrepoint, the group’s flagship clinic, also houses more than 10 laser and light machines offering a comprehensive suite of family practice dermatology and aesthetic medical services.
Besides Ong, who is also president and chief medical officer, the company has four other doctors providing family-practice dermatology and aesthetic medical services. All of them are registered as GPs with the Ministry of Health and have, on average, over 20 years of experience in the industry.
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The company runs three retail outlets in Singapore: in Ang Mo Kio Central, Bedok Central and The Centrepoint. They provide consumers with convenient access to non-prescriptive Niks skincare products and facial services using Niks products. The outlets also offer paramedical camouflage products and services, which employ specially formulated Niks Cover Creams to cover difficult-to-conceal skin conditions like vitiligo, birthmarks, varicose veins, psoriasis and hemangioma. The company focuses on developing the products and outsources production to other companies.
On top of that, the company operates an e-commerce platform on its website to allow customers to purchase Niks skincare products. These products are also supplied to some third-party medical clinics and beauty salons.
To drive further growth of its businesses, Niks Professional on Sept 29 lodged its draft prospectus to indicate its intention to seek a Catalist listing on the Singapore Exchange S68 .
Listing aspirations
According to Cheng, he wanted to take the company public four years ago, as he felt it would be difficult to expand further without a listed platform. This was especially true in China, where status as a listed company would strengthen the company’s branding and trustworthiness within the market. “Going public also allows us to offer share option plans to our staff. We plan to expand our clinics in Singapore and intend to open one in the west,” adds Cheng.
The company is mulling over some inorganic expansion plans, and shares of a listed company will be the necessary currency to complete such deals. “Two private companies exchanging shares is not exciting,” he says.
As described in its draft prospectus, proceeds from the IPO will be used to fund the organic expansion of its business through new store openings in Singapore and the expansion of its medical skincare products in China; inorganic expansion through M&A and joint ventures; as well as for general working capital.
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SAC Capital is this IPO’s sponsor, issue manager, underwriter and placement agent. SAC will continue to sponsor for at least three years from the listing date.
In the results for its latest FY2022 ended December, earnings came in at $2.8 million, a drop from FY2021’s $3.3 million. Meanwhile, revenue came in at $11.1 million, slightly lower than $11.7 million a year ago. Cheng explains that FY2022 was a slow year for Niks Professional, as several clients travelled overseas and postponed their doctors’ appointments and facial treatments. China was also still under lockdown last year, which affected its financials. Additionally, one of the key doctors took an extended break in FY2022.
Why is Niks Professional choosing this time when China has not fully recovered from the pandemic, and the broader equity markets are stagnant? “It is very difficult to time a listing. We have been preparing for this for over a year, and when we started our preparations, it was hard to forecast today’s market situation,” says Cheng.
For FY2023, Cheng is cautiously optimistic. He acknowledges that China is recovering more slowly than expected, but he believes that fundamentally, there is a strong demand for what Niks Professional can provide, especially in Singapore. Cheng is hopeful about China’s post-Covid prospects and is still upbeat on the long-term benefits of being listed. “With our track record and stable results, I believe we can see through this IPO,” he adds.
Industry outlook
While Cheng is ambitious to drive further growth and go beyond Singapore and China in the medium term, the company’s near-term focus is on these two existing markets, where Cheng sees many more growth opportunities waiting to be captured.
For Cheng, the skincare and dermatology space prospects in Singapore remain strong. “Acne and eczema are long-term conditions. The efficacy of our products will help our patients, but these conditions will last about 10 years or so. And even if these patients end up healing from their conditions, this is a common condition in the population, and we will see a constant flow of new patients,” says Cheng, adding that this is regardless of age as both acne and eczema also surface often within the ageing population.
According to Converging Knowledge, the Singapore private dermatological and aesthetic medicine market had a market value of $57.9 million in 2022. This market is seen to grow at a CAGR of 5% from 2019 to reach $66.1 million in 2025. The study is commissioned by Niks Professional and refers to the market of general-practice clinics.
The report looked at the market for skincare products in China. According to Converging Knowledge, China is already among the world’s three largest markets for such products, ranking behind Japan and the US, with a value estimated at US$40 billion ($55 billion) in 2022. Besides the obvious demand from women, Converging Knowledge points out that males’ adherence to beauty routines was frowned upon in the past. “Chinese men now take special care of the type and quality of skincare products they use, and follow beauty routines like what their female counterparts have been doing for aeons,” the report reads. In particular, more than 60% of so-called Gen Z Chinese men use skincare products daily.
Niks Professional may be eager to capture such market opportunities, but Cheng notes that at the core, the company is still a healthcare provider and will put its care for patients and medical ethics first. While it did state that “professional responsibilities of our doctors to patients may override the interests of our shareholders” under the risk factors in its prospectus, Cheng elaborates that patient care can never be a trade-off and that if the treatment is done well, it will eventually help the company, as patients help to refer the clinics to other people.
With two of its three clinics in the heartlands, Niks Professional focuses more on serving local patients and less on medical tourists. Having said so, Cheng points out that the company’s clinics and retail outlets see several patients from Johor and Batam. “That is also why we want to open our next clinic in Woodlands — to make it easier for our patients from Johor to visit,” says Cheng.
Cheng feels that Niks Professional is on top of its game, without direct competitors with the same offerings. “We don’t think there are any identical competitors, those with presence in family-practice dermatology, aesthetic medicine and medical skincare products all at once.”
