Mexter’s healthcare business takes off
Company launching upscale confinement centre in TTDI
FROM the time Lim Yin Chow took over a controlling stake in low-profile IT firm Mexter Technology Bhd last March, the market has been watching its developments. Considering Lim’s background as a co-founder and owner of HSC Medical Centre, it will be interesting to track his journey with Mexter.
HSC, after all, was shaped into a notable diagnostic, heart and medical centre in the city, and in 2014, reported an annual profit of more than RM60mil.
Lim is reported to have divested his stake in HSC in early 2016. It is likely he used some of the proceeds to buy the 28% stake in Mexter in June of that year.
Clear hints of what Lim and Mexter have been up to came about from a stock exchange filing by the company last May when it said it had gotten shareholders’ approval to diversify into healthcare services. The company said it was going into mother-and-child-related healthcare services.
But even before firmer plans came about, Mexter was seeing a spectacular rise in its share price. Since last August, the price of Mexter’s shares has more than doubled.
Investors may have been attracted to the healthcare possibilities of Mexter, considering that healthcare stocks in Malaysia trade at high valuations. The three listed hospital groups on Bursa Malaysia enjoy an average price earnings multiple of a whopping 55 times earnings.
Another notable development is that Mexter managed to place out 20% of new stock, raising some RM14mil.
And now, it’s showtime. On March 1, Mexter’s first mother-and-child centre will open in the affluent suburb of Taman Tun Dr Ismail (TTDI) in Kuala Lumpur. Called the “LYC Mother & Child Centre”, it will be located at levels two and three of the podium block in Plaza VADS, TTDI. The centre will have a capacity of 33 rooms.
In an email reply to StarBizWeek, the company explains why it has chosen healthcare and postpartum care specifically as its focus.
“The healthcare industry is a comparatively stable market and is anticipated to compensate for business cycle fluctuations. Mexter has chosen mother-and-child-related healthcare services as its maiden focus in the healthcare segment as Malaysia has a relatively young demographic, which makes this sub-segment an attractive business proposi- tion with good long-term viability.
“Confinement care is a traditional post-natal practice which is aimed at helping new mothers recover from the rigours of pregnancy, labour and birth. The main objective of a postpartum care centre is to ensure that the mother and baby are healthy, and the mother is equipped with all the information about motherhood and the baby is looked after during the mother’s recovery period,” it says.
Another reason for this business - new mothers in urban areas are finding it increasingly difficult to source suitable confinement ladies.
“The confinement ladies play a crucial role full-time at home during the confinement period, which typically lasts for 28 days after childbirth,” Mexter says.
That may well be the case, but this is an industry which is growing, with a number of existing and new mother-and-child centres being opened mostly in the Klang Valley. How will Mexter’s LYC Mother & Child Centre be different?
Five-star centre
Dr June Yang, recently hired to spearhead Mexter’s healthcare division, says the company is setting up a ‘five-star’ confinement centre.
Speaking to StarBizWeek, she says: “We aim to set the benchmark in the postpartum care industry. To achieve this, we have established a stringent standard operating procedure to ensure high standards of service for the safety of the mother and child,” explains Yang, who was previously the group chief operating officer and director of HSC Medical Centre.
Mexter aims to target urbanites in the city and with their first facility of 33 beds, lays claim to being the largest in the local market.
Yang adds that other aspects of its facility include a wellness spa, hair salon and a partnership with local wellness partner Tanamera for the provision of pre- and post-natal massages.
Mexter says it will be spending RM6mil on renovation costs to create a high-end centre for its patients. This amount will come from the RM14mil raised in Mexter’s recent placement exercise. The balance RM8mil from that has been earmarked for working capital. Another key differentiating factor is that Mexter has engaged an operations consultant from Taiwan, Dr Cheng Chih-Chieh, who will help oversee Mexter’s centre and expansion plans over the next five years.
“Cheng founded Taiwan’s Darling Baby Postpartum Nursing Centre, which is fairly successful. He is also attached to the department of obstetrics and gynaecology of Taipei City Hospital,” explains Yang.
Notably, Mexter has also hired a new group chief executive officer and managing director (MD) – David Sui Diong Hoe – who was previously the MD of Ralco Corp Bhd and a director of Timberwell Bhd. During his tenure in Ralco Corp, Sui managed to turn around the loss-making company within a one-year period.
CIMB Research issued a non-rated report on Mexter on Jan 8, noting Mexter’s intention of becoming Malaysia’s largest provider of mother-and-child medical services in lux- ury portpartum care.
“This would make Mexter the first listed company in Malaysia (and globally to the best of our knowledge) to have postpartum care as its primary business,” the report stated.
CIMB Research also noted Mexter’s intention of setting up five to seven sizeable portpartum centres in Malaysia with a total of 100 to 200 beds in the Klang Valley in the near future.
It also noted that Mexter is looking to venture into medical tourism through potential mergers and acquisitions.
“Using regional private healthcare providers as comparable listed peers, the sector is currently trading at a forecast financial year 2017 price earnings multiple of 44.7 times for healthcare stocks under our coverage. Although it is still a loss-making company, Mexter’s management believes the planned disposal of its existing IT and SMS business segments, as well as positive earnings from its mother-and-child centres, could bring Mexter back to the black in the second half of 2018,” CIMB Research said.
On the question of the profitability of the TTDI mother-and-child centre, Mexter says that the centre should hit operational profitability by the second half of the year.
“We are actively on the lookout for healthcare projects and are currently assessing several proposals,” the company says.