TDM to leverage on healthcare ops
Group expanding facilities to cater to growing demand
PETALING JAYA: TDM Bhd may not be a familiar name to most of the market but the smallish plantation player is also involved in the healthcare business.
The company, which is based in T er eng ga nu, has been involved in the healthcare sector since its listing and is eyeing further growth from this segment, moving forward.
It has two hospitals in the Klang Valley – the Kelana Jaya Medical Centre (KJMC) and Taman Desa Medical Centre (TDMC) – while another two are located on the east coast of Peninsular Malaysia in Kuantan and Kuala Terengganu.
The division, which offers secondary healthcare services through these hospitals, is parked under 99.28%-owned subsidiary Kumpulan Medic Iman Sdn Bhd.
The company said it operates these services on an “affordably priced” basis.
Presumably, with it operating on an affordable basis, TDM’s healthcare segment achieved profit margin of 6.4% for the financial year ended Dec 31, 2015 (FY15).
Growth was stronger though. The company said in its annual report that the healthcare division had recorded a strong 22.7% growth in inpatient numbers last year.
“The inpatient days also improved by 23.9% compared to the previous year. This is mainly driven by the new Kuantan Medical Centre (KMC), which saw its inpatient numbers and inpatient days jumping 54% and 51%, respectively,” TDM said.
Indicative of the high demand for private healthcare, KMC has full capacity just over a year into its operations in November 2014.
TDM will also open the new 130-bed Kuala Terengganu Specialist Hospital (KTS) in October 2016.
The new KTS includes five operating theatres, five delivery rooms, one laboratory, a 12-bed intensive care unit (ICU), one 19-bed neonatal ICU and 25 specialist clinics.
Meanwhile, KJMC would be expanding its bedcount with eight more new beds to 50 beds, the company said.
TDMC will also be expanding its bedcount by 27 to 80 beds with its renovation.
Today, TDMC offers services such as minimally invasive surgical procedures with the use of laser to treat haemorrhoids and varicose veins; and also offers treatment for sports-related injuries.
With the opening of the KTS hospital and capacity expansion in their other hospitals, TDM will see an increase in its overall bedcount to 427 by the end of the year from 297 beds presently.
The increase in capacity will also see its importance rising to the overall group.
The healthcare segment contributed 15.24% of its overall pre-tax profit of RM69.35mil in FY15.
Plantation, which is still the company’s mainstay business, contributed some 84.7% of its FY15 pre-tax profit.
Public Investment Bank rates the stock a “buy”, with a 12-month target price of 83 sen, which implies a close to 19% upside from present levels.
The research house said in a recent report that TDM had beaten its and consensus estimates by 30% and 19%, respectively, after the company posted a core net profit of RM34.2mil for FY15.
This is after stripping out an unrealised foreign exchange gain on fixed-income securities of RM31.9mil, recognition of deferred tax assets totalling RM9.7mil, gains on fair value changes of embedded derivative of RM1.7mil and other one-off losses amounting to RM3.5mil.
“As at end-2015, total planted area was around 47,000ha while mature area accounted for 75%. Management plans to plant about 1,000ha in Kalimantan this year and expects another 5,000ha to turn into mature areas, that will make up (a total of) 12,000ha mature area,” Public Invest said in the note.
“On the cost of production, management expects a lower all-in cost of RM1,400-RM1,500 per tonne compared to RM1,500 per tonne in FY15, as the installation of steriliser at existing mills will help lower the processing cost by 25%,” it added.
There are two other research houses covering the stock, with one “buy” and “hold” rating each.
With a formidable market capitalisation of RM1.03bil, TDM is presently trading at a forward price-to-earnings ratio of 13.4 times.
Its shareholder list showed the stock as being widely held by several key institutions, with the Retirement Fund (Inc) as the single-largest institution with 8.5% stake.
The other institutions with smaller stakes include the Employees Provident Fund, several Public Mutual funds and AIA Bhd.
Its single-largest shareholder is Terengganu Inc Sdn Bhd with a 62.19% stake.