Reinvested funds from SPC divestment in Thomson Medical Centre on 28th August 2009

Motivation

I see potential in SPC and was prepared to hold on for the long term since I got it when the oil industry was in its doldrums. I was still hopeful that more than 10% of minority shareholders of SPC could hang on to their shares. Unfortunately, PetrolChina easily collected more than 90% of SPC's shares and 'forced' me to divest my holdings. As a consolation, at least I'm fortunate to make slightly over 120% on my investment in SPC.

Anyway, with funds I raised from my sale of SPC, I plough some back into the market and bought Thomson Medical Centre, my 2nd investment into 'growing or recovering' but neglected businesses, after Food Junction (all in one day).

Thomson Medical Centre, TMC

One can read about TMC from their website and financial reports. In short, they aim to be a leading healthcare provider for women and children and its developments over the years indeed indicate that they are moving in the right direction. Other than the usual obstetrics and gynaecology (O&G), paediatric services and fertility treatment services, they set up the Thomson Women Cancer Centre, TWCC. TWCC is dedicated to the prevention, diagnosis and treatment of breast, gynaecological and colorectal tumours in women. Recently, they announced the setting up of the Thomson Chinese Medicine Pte. Ltd.

Performance


Is it explicitly mentioned in TMC's 1Q 2009 financial statements that the group seeks to grow organically. That explains its low gearing below 5%. As such, the fact the TMC can grow steadily over the years is quite impressive, at least to me.

Reasons to be optimistic

Branding (Singapore, not TMC)

Singapore's status as a Medical Hub in the region boded well to attract a healthy load of clients for TMC's services. Though the fertility rate of Singaporeans is pretty low, the countries in the region are still very productive. Given the growing affluence in the regional countries, especially the higher income group, more will come to Singapore and TMC will be one of those to benefit.

One of the first choice among private hospitals

Among my friends and colleagues, if not KK, TMC is the overwhelming first choice they choose for O&G services. It seems to me that TMC is the most affordable private hospital if couples choose to pay more. To gather more clients, TMC actually have 7 Thomson Women’s Clinic spread across the island to refer perspective mothers to TMC.

Risk

TMC seems to be more like a hotel than a hospital. In an attempt to grow, their services become more commercialised than personal. A few couples I know choose not to go back to TMC for subsequent child and instead headed to Mount Alvernia or Gleneagles Hospital (basic package is just slightly more expensive than TMC). Hopefully TMC will take note of all customer feedback and improve their services as they grow.

Conclusion

As the region's economies grows out of the current recession, there should be more babies to come along and help TMC to fulfill is dream to be the leading healthcare provider for women and children.