To The Moon

🌟🌟🌟TalkMed $TalkMed(5G3.SI)$ is a premier provider of medical oncology, stem cell transplants and palliative care services, serving patients in Singapore, Vietnam, China and Hong Kong. 

On Monday, TalkMed's  share price jumped 12.3% on news of a potential acquisition.  In most cases whenever there are  talks of potential acquisition, the stock price of the target company tends to rise.  This is because the acquiring company pays a premium for the acquisition in order to provide an incentive for the target company's shareholders to approve the takeover and to reflect the expected synergies and the strategic benefits of the acquisition.  However TalkMed has issued a statement that the discussions are ongoing at this stage and that there is no assurance that a transaction will take place. 

Is TalkMed a good buy?   Let's check out its Annual Report 2023 issued in April 2024.

TalkMed owns Singapore Cancer Centre (SCC) which provides multidisciplinary medical oncology services, stem cell transplant and palliative care services.  SCC's clinical functions include attending to patients, examining and administering medical treatment to patients as well as performing minor outpatient surgical procedures.  As of March 2024, TalkMed Group has 17 doctors operating at 9 clinics in Gleneagles Hospital, Mount Elizabeth Hospital, Mount Elizabeth Medical Centre and Mount Elizabeth Novena Specialist Centre which are operated by Parkway Hospitals.  SCC has established itself as one of the market leaders in medical tourism in Singapore with foreign patients accounting for more than half of its patient load in the last few years.  Many of the patients are from neighbouring countries such as Malaysia, Indonesia and Vietnam. 

TalkMed also owns TalkMed Vietnam, TalkMed Greater China.  In Vietnam TalkMed owns the Singapore Cancer Centre Thu Cuc which provides medical oncology services in Hanoi Vietnam. 

 In China, TalkMed owns TalkMed Shanshui Medical centre  as well as TalkMed Hospital Management in Beijing.   TalkMed owns 3 subsidiaries  in Chongqing.   These are Sino Singapore Cancer Centre as well Chongqing MedTech Health Management. 

In Hong Kong, TalkMed owns 60% of CellVec Pte Ltd, Bio Cell Innovations and 30% Hong Kong Integrated Oncology Centre. 

Talk Med reported a 9.4% year on year revenue growth to SGD 83.8 million in FY 2023 from SGD 76.6 million. 

Growth was primarily driven by its flagship oncology services segment which contributed 96.7% of the Group's revenue.  During the period, TalkMed saw an increase in the number of patient visits in Singapore with the influx of foreign patients being a primary driver.  TalkMed's oncology centres in China and Hong Kong reported nearly 3 fold increase in revenue to SGD 2.3 million in FY 2023, which also benefited from the ease of movement in the region. 

However revenue from TalkMed 60% owned subsidiary CellVec, came in lower at SGD 2.8 million in FY 2023 compared to SGD 3.2 million in FY 2022.  CellVec is involved in cellular and gene therapy related products and services. 

Operating expenses increased in FY 2023 due to higher staff costs on the increased headcount in Singapore and increase in laboratory consumables, following increase in number of patients.  Profitability remained robust despite higher operating expenses as TalkMed reported a profit before tax year on year increase of 2.6% to SGD 37.8 million due to higher revenue reported. 

TalkMed recorded a net profit of SGD 32.2 million in FY2023 which was a 5.3% increase year on year. 

TalkMed maintained a healthy balance sheet position in FY 2023. As at 31 December 2023, cash deposits and equivalents was SGD 89.9 million, an increase of SGD 9.3 million from previous year.  Net Cash Flow was SGD 41.7 million compared to SGD 37.3 million in the previous year. 

TalkMed distributed its interim dividend of 0.90 cents per share followed by a final dividend of 1.30 cents per share.  Total dividend for FY 2023 is 2.20 cents per share, translating to a payout ratio of 90.6%.

TalkMed's oncology services are well positioned to capitalise on foreign patient influx.  The company said that it will continue to focus on faster and more efficient client servicing across its medical centres.   In China and Hong Kong, TalkMed expects patient numbers to improve given the large market in the region.   Demand for cancer treatment is expected to increase with the ageing population in Hong Kong too. 

While I am excited at the prospect of TalkMed's potential acquisition, TalkMed also ticks all the core fundamentals of an excellent company.  It is profitable, has a strong balance sheet and a great management team.  Medical services is an essential service that is more resilient in any economic cycle too.  $TalkMed(5G3.SI)$ is a hidden gem in the SGX with lots of upside potential waiting to be discovered. 

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