HEALTHWAY MEDICAL’S trading volumes jumped today after investors caught on to former remisier king Peter Lim's recent purchases of the stock.
His interest in Healthway came under the spotlight after open market purchases via investment vehicle Kestrel Capital on 2 Jun bumped his deemed stake above 5%.
Latest purchases in the owner of Singapore’s largest network of private medical centers and clinics upped his deemed stake to 7.21% as at 10 Jun.
Never mind that Heathway’s net profits contracted 63.9% year on year for the first quarter of FY2010 --- its trading volumes surged tenfold overnight thanks to investor interest spurred by the smart money move.
128 million shares changed hands today, the highest since Jan this year.
The company generated net profits of S$1.36 million for 1Q2010.
Revenues for 1Q2010 were S$22.2 million, down 6.3% year-on-year. However, net margins fell due to an increase in operating costs, which include overheads, new doctors hires and start-up expenses in its new centres.
Ernest Lim, CFA, CPA, a remisier with CIMB-GK Securities, said: "There has been much trading interest in Healthway post Mr Lim Eng Hock’s (better known as Peter Lim) announcement that he has become a substantial shareholder of Healthway in early June. In addition, the partial takeover bid of Parkway spurs interest in healthcare stocks.
"However, investors should do their due diligence before jumping onto the bandwagon of healthcare stocks, as they have diverse fundamentals and trade at different valuations."
In the past 6 months, Healthway started several new centres offering family medicine and specialist services, namely ear, nose and throat surgery, eye surgery, general surgery, cardiology, sports medicine, psychiatry, paediatric pulmonology, paediatric endocrinology, paediatric neurology and child psychology.
The stock last closed at 20 cents, up 25% on a steady trend compared to two weeks ago when Peter Lim's interest was made public.
The stock may already be at an estimated 22x PE for the current year (compared to 19x sector average), but DMG’s Lynette Tan has a ‘Buy’ call on the stock with her target price at 30 cents.
Analysts like Healthway for its expansion plans.
It aims to double the total number of clinics in Singapore (including 60 specialist clinics) in the next 5 years to 200. Of this total, the number of primary healthcare clinics (including 20 dental practices) is expected to grow from 70 to 140.
It also plans to have a total of 8 medical centers in Shanghai, of which 6 will be operational by this year.
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