Financial Analysis of Econ Healthcare (Asia) Limited: Significant Net Profit Growth of 96.3%

Business Description

Econ Healthcare (Asia) Limited operates across Singapore, Malaysia, and China. The company provides eldercare services, operating nursing homes, medicare centres, and residential care facilities. Recently, the company has expanded its services to include ambulance services.

Core Business Operations

• Nursing homes and medicare centres in Singapore and Malaysia
• Ambulance services in Singapore

Geographic Footprint

• Singapore: Main revenue contributor
• Malaysia: Significant growth and expansion
• China: Discontinued operations and strategic restructuring

Industry Position and Market Share

Econ Healthcare is a key player in the eldercare industry in Asia, particularly in Singapore and Malaysia. The company faces competition from other regional eldercare service providers but maintains a strong market presence due to its comprehensive service offerings and high occupancy rates.

Revenue Streams

• Medicare centres and nursing home fees
• Ambulance services

Customer Base

The company’s primary customers are elderly individuals in need of residential care and medical services. The high occupancy rates indicate a strong demand for their services.

Supply Chain

Econ Healthcare sources medical supplies and consumables for its operations, and has a well-managed supply chain to support its various business units.

Competitive Advantage

The company’s competitive advantage lies in its established presence in the eldercare sector, high occupancy rates, and recent expansion into ambulance services.

Financial Statement Analysis

Income Statement

Revenue for the six-month period ended 30 September 2024 was S\$32.7 million, a 33.7% increase from S\$24.5 million in 6M2024. EBITDA increased by 44.4% to S\$10.1 million. The company’s net profit after tax and minority interest (PATMI) from continuing operations increased by 96.3% to S\$3.7 million [[4]].

Balance Sheet

As of 30 September 2024, the company had total assets of S\$96.7 million and total liabilities of S\$49.0 million. Notably, cash and cash equivalents increased to S\$17.8 million [[14]].

Cash Flow Statement

Net cash flow from operating activities was S\$9.2 million, an increase from S\$6.2 million in the previous period. Free cash flow was S\$8.2 million [[14]].

Dividends

The company proposed an interim dividend of 0.48 Singapore cents per share for 6M2025 [[15]].

Key Findings and Recommendations

Strengths

• Strong revenue growth and significant increase in net profit
• High occupancy rates in nursing homes
• Expansion into ambulance services contributing to revenue

Risks

• Potential regulatory changes in healthcare sectors
• Economic uncertainties that could impact operational costs

Special Activities

The company is actively expanding its bed capacity in Malaysia and exploring new locations for further growth. Additionally, the company has divested its interests in certain China subsidiaries to focus on joint venture projects in China [[5]].

Recommendations

For Current Investors

Given the strong financial performance, significant net profit growth, and strategic expansion plans, it is recommended to hold onto the stock.

For Potential Investors

The company’s impressive growth and strategic initiatives make it an attractive investment opportunity. It is recommended to consider purchasing the stock.

Disclaimer

This analysis is based on the financial report provided and reflects the current views on the company’s performance. Investors should conduct their own research and consider their financial situation before making investment decisions.

Date of Report: 12 November 2024, for the six-month period ended 30 September 2024.