Look at the executive directors. There is only 1 \"REAL\" doctor in the board. The rest of the executive directors are financial people. Do they have experience in running a real business? No idea. Going through their annual report, I would said that the value of this Company lies in its brand that it has acquired over the past years. It is not easy to build up a network like Healthway especially in Singapore where it is so competitive. Would I pay 12x PE for a Company with only Singapore as its sole market OR Would I pay 20x PE for Parkway, an established healthcare franchise across SE Asia?
I look at Healthway as a business. It is important to have business minded people running a business. I don\'t think we need more doctors on Healthway\'s board. Of course, if we have more business minded doctors, why not? For sure, we need doctors in the clinics. Healthway has taken definite steps to expand into China with their platform in Shanghai. It will not remain purely a Singapore brand for long. Healtway has been clever to identify and fill areas in healthcare services which are underserved. Their business model also creates strong cashflow. This gives a solid foundation for growth without being too reliant on financing. Healthway has a historical PE of 13 (@13c). Parkway has a historical PE of 54.8 (@$2.41). RMG has a historical PE of 21 (@$$1.39). Figures by DBS Vickers. Parkway\'s 2010 forecast PE is 22. RMG\'s is 18. There is no forecast for Healthway. However, if I were to hazard a guess, Healthway\'s PE would improve at the same pace as RMG\'s, if not more, looking at both parties\' 3rd quarter results. Parkway has a pedigree which even RMG must take a backseat to. I would compare Healthway with RMG and not with Parkway. Remember when RMG first started? I think Healthway is stronger than the RMG of old. Healthway is a company to watch.
My next question would be, if the Company is so good, why is the Executive Director selling the shares in open market? Another point -- Read their service agreement in the prospectus. Not too encouraging.
Insiders can sell shares in the company for many reasons. Maybe, they are buying a new property or meeting some other expenses. I am not usually concerned when one or two insiders sell some of their shares. I will, however, take notice if insiders are selling en masse and in larger percentages which is not the case here. In the last dividend payouts, insiders opted for scrip dividends rather than cash. Updates on 20 Nov 09. I did the same. I have read the service agreement you mentioned in Healthway\'s prospectus. Would you like to share your concerns here?
hi, AK71 - i agree with u that healthway is a stock that is growing fundamentally stronger each day... Have to admit that I did vested some into HW... \"The current weakness in Healthway\'s price presents an opportunity to accumulate and I\'ve done so\" -> Maybe u can elaborate on what u think is its weakness. For Healthway, the greatest weakness I think it currently has is its high outstanding share. A small change in price can lead to significant % change and those who do not plan to hold long term will be very tempting to sell. It will take a large amt of buyer to push the price up because of oversupply. Using the CAN SLIM method and adapting growth investing,
www.investopedia.com/university/stockpicking/stockpicking7.asp
C = Yes. EPS Q3 09 grows 45% vs Q3 08. Using cashflow operation confirms EPS is of good quality earning. A = Yes. yoy Q3 09 revenue is 30%. Expect FY09 vs FY08 revenue growth to be around 20% to 28% N = Yes. 10 new specialists centres lauched in Q4 09 and Q1 2010. S = No. Too much supply. Would prefer HW combine two shares into one to reduce supply. or insider starts buying significant no of shares and limit the supply available to the public (in other words, insider buying shld be more than insider selling... which unfortuately not the case...) L = Subjective to some. But HW did show its strong market leadership in certain services, such as being the leading GP clinic network and having a couple of good specialist clinics. I = Yes. There are some institutional sponsors... M = Yes. It is quite heavily traded occasionally.. Hope these are long term traders. Another risk factor lies in the management assessment. - I don\'t know any of the management and neither have I talked to any of them yet. Feedback by some of my doctor friends are that they think that the ppl in HW are generally very mercenary. Impression is mainly due to the IPO flop. Are the management just care abt making money in the IPO (since HW has high debt outstanding at that time of IPO) or really want to offer a good value stock to the shareholder who believes in them during the IPO? But one thing it shows is that these ppl have very strong business-minded, or else, it seems kinda hard to have such an overvalued IPO... My bet is that now that the HW\'s expansion has been on the right track, for the management\'s personal interests, i guess the management will want to grow their company and boast their share price up too.. Thus, i believe it\'s still the right time to start accumulating it... On balance sheet, fundamentally, numbers show it is growing stronger.. But management-wise, there is some risks.. At least, I have never heard of any comments saying that the management is a nice boss... blah.. blah... etc.. I also have to admit that i didn\'t hear anything bad abt their management, other than the only mercenary comment part on them, mostly due to the IPO incident. Certainly, the management are competent... if nt that IPO flop won\'t happen.. But are they nice management who will bring value to shareholder? Just my view... To conclude, other than the S and some concerns regarding management, i think HW has what it takes to be a good growing stock... AK71: Two qns for u: 1) In June 08, HW spent 107 million to acquire SBC and island orthopedic, which can generate around maybe 30 m to 40 m revenue per yr. Do u think that\'s a fair acquisition price that HW pays for? 2) Regarding the prospectus - care to share yr view abt Crane Medical. I know Crane medical is making a loss... I don\'t know much abt healthcare business in shanghai.. so, what do u think? what\'s the success and risk factors that HW will face in their China\'s expansions? Also, i think Parkway is also planning to explore some expansion into shanghai... thanks
Hi, newbie123. Thanks for a very systematic look at the company. When I spoke of \"weakness\", I was referring to price weakness, not weakness in the business. I use a mix of fundamental and technical analyses in my approach to investment. I was using the latter then. I have friends who know Dr Wong personally. They told me he is hardworking and honest. His family background is also impressive. He is a doctor in a family of businessmen and accountants. He himself holds a MBA. We need business minded people to run a business. I generally do not want to depend too much on hearsay in my investment decisions. For example, I did not invest in Raffles Medical Group years ago when it was about 50c because a friend who was working as a manager there told me how (.....) the bosses (directors) were and that he would not bother investing in the company. Well, see where the price is today? How do I usually decide on whether a company is a worthwhile investment these days? Firstly, I look at the sector versus the economy. Secondly, I look at the company\'s numbers to ensure that it is not over-valued, that it is profitable, that it is not too highly geared and that it has good cashflow. Thirdly, I compare the company\'s numbers to its peers. There are other things which I might look at in time but these 3 points form the core of my fundamental analyses. Then, I use technical analysis (charting) to decide on fair entry points. As for whether they overpaid in their acquisitions, when we buy over an established business, paying a PE of 5 to 7 is pretty normal. I do not have the figures, so, I cannot say for sure if they overpaid. However, I am sure that the acquisition is a good move from a business development perspective. As for expanding into China, that is a good idea too since there is only so much growth we can expect from our domestic economy. They have been involved in the management of Crane. They have learned firsthand the difficulties and developed solutions before taking this big step in China. This is where we take a leap of faith. Your guess is as good as mine. Will they be able to execute the expansion into China successfully? I know that the management has proven themselves so far to be astute and aggressive. The business is a defensive one with stable and growing demand. The management is not resting on its laurels and have grown the business rapidly. The business model enjoys a strong cashflow. Directors are committed to the business and have opted for scrip dividends instead of cash. This has diluted the NAV per share to
