LYC Healthcare mulls spinning off dental, aesthetic businesses for listing

LYC Health care Bhd, which is in the midst of spinning off its healthcare treatment small business as a result of a listing in Singapore, is currently considering a different spin-off listing — this time on Bursa Malaysia. In accordance to team CEO and controlling director David Sui Diong Hoe, the group is wanting at a possible spin-off listing of its dental and aesthetic division within the future 3 several years.

“For now, we are seeking at Bursa’s ACE Market. But if our division’s financial gain is sizeable 3 decades later on, we will not price cut the probability of getting detailed in Hong Kong,” he tells The Edge in an interview.

The team presently operates three dental clinics below the brand name identify KL Dental in Puchong, Mont’Kiara and Subang. It also owns an aesthetic centre and a wellness centre in Bandar Sri Damansara, as nicely as a beauty and attractiveness clinic in Bangsar South.

“Currently, our complete dental and aesthetic division is earning a income of close to RM1 million per calendar year. We are in the center of negotiations to purchase a different firm that is producing [an annual profit of] about RM1 million. We approach to obtain far more rewarding organizations from which we can derive synergies in the upcoming couple many years,” says Sui.

He adds that LYC Healthcare’s dental and aesthetic enterprises share very similar buyers. “Today, dental is not just about treatment method, but also about bettering the overall look of teeth. With our aesthetic and beauty centres, we can kill two birds with one stone.”

The 66-yr-outdated was appointed to LYC Healthcare’s board in July 2016. He earlier served as taking care of director of Ralco Corp Bhd and as non-govt director of Timberwell Bhd.

Prior to the Covid-19 outbreak, LYC Health care had been focusing on natural advancement, as it nurtured its healthcare and health care-connected businesses, which involved four confinement centres and a childcare centre.

But given that 2020, the group has begun to actively obtain new companies, together with a 51% stake every in Singapore health-related corporations T&T Health care Group Pte Ltd (T&T) and HC Orthopaedic Operation Pte Ltd (HCOS), a 70% stake in Aqurate Ingredients Intl (M) Sdn Bhd and a 21% strategic stake in ANOC Medicare & Diagnostic Centre.

LYC Healthcare is now attaining the remaining 49% shareholding in T&T and HCOS. These two corporations, together with Aqurate, will be grouped underneath LYC Medicare (Singapore) Pte Ltd, which will be applied as the motor vehicle to list on the Catalist board of the Singapore Trade (SGX).

Notably, LYC Health care experienced, in between 2018 and 2022, allocated full money expenditure of RM170 million to increase organically and inorganically. As at Dec 31, 2021 (3QFY2022), the group’s web gearing stood at 2.18 periods.

LYC Healthcare mulls spinning off dental, aesthetic businesses for listing

“Today, we are no extended just a confinement centre operator. Natural advancement normally takes time. For case in point, when I get a organization that is producing a profit of RM1 million at a For each (cost-earnings ratio) of 8 instances, it will halve to 4 instances if I can double my financial gain. Which is how rapidly we can grow by M&A (merger and acquisition) workout routines,” suggests Sui.

“But for us to start a new business, to breakeven and then to make a RM1 million revenue, it will probably take a lengthier time. Which is why we have been aggressively acquiring organizations in Malaysia and Singapore more than the earlier two a long time.”

In a nutshell, he thinks LYC Healthcare could unlock the expenditure benefit of the firms it has been getting by using the spin-off listing on SGX, adopted by the next a single on Bursa.

On the listing of LYC Medicare SG, Sui suggests the group will be searching at a For each of 15 periods. At the moment, its group of businesses is generating a profit of about S$6 million (RM19 million) and for this reason, its estimated market place capitalisation would be about S$90 million. Put up-listing, LYC Health care will keep a stake of about 54% to 55% in LYC Medicare SG.

It has been 6 a long time considering the fact that low-profile businessman Lim Yin Chow emerged as the significant shareholder of Mexter Know-how Bhd, which was loss-making at the time. After that, the group’s concentrate — which was primarily on the provision of mom and childcare-associated companies — expanded to consist of the health care and healthcare-connected business enterprise, while its identify was improved to LYC Health care in January 2019. But these expansions have yet to aid the group return to earnings.

According to its 2021 annual report, the group — which described a decline right after tax of RM2 million for the 15-thirty day period economical time period ended March 31, 2017 (the expanded interval was owing to a adjust in monetary 12 months conclusion from Dec 31) — noticed its reduction after tax worsen from RM5.2 million in FY2018 to RM6 million in FY2019, RM10.3 million in FY2020 and RM11.8 million in FY2021.

At stop-FY2021, LYC Health care experienced accrued losses of RM59.89 million at the team amount — from a reduction of RM47.61 million at finish-FY2020 — and RM38.66 million at the enterprise level. In June past 12 months, its shareholders accredited a proposed capital reduction to terminate RM37.41 million of its issued share funds to offset its gathered losses from the corresponding increase of RM37.41 million in credit rating.

Sui claims LYC Healthcare’s the latest acquisitions will aid accelerate its path to profitability as it rides the predicted growth in demand for healthcare-relevant providers, pushed by the ageing populations in Malaysia and Singapore.

“We are often on the lookout for corporations in the healthcare house that complement our present enterprises. We have been speaking to several organizations, but no definitive agreements have been signed. The sectors we are searching at are maternity hospitals, cosmetic and aesthetic centres, dental clinics, and overall health and wellness corporations,” he suggests.

With 14.4% fairness fascination, Lim is the major shareholder of LYC Health care, followed by significant shareholders Kenanga Traders Bhd for BLM Holdings Sdn Bhd (9.09%) and Tee Chee Chiang (5.45%).

Final Thursday, the share price tag of ACE Market place-listed LYC Healthcare had dropped virtually 15% 12 months to day to shut at 23.5 sen, supplying the group a market place capitalisation of RM120 million.