More than a year ago I did a deep dive into Perfect Medical Health Management Limited (“Perfect Medical”) (formerly known as Perfect Shape Medical Limited) (HKG:1830). At that point of writing, the group was a premium slimming and beauty service provider with a market capitalisation of approximately HK$3.42 billion.
Fast forward to today, Perfect Medical has ventured into the medical healthcare business. And the Group’s market capitalisation has more than tripled to approximately HK$12.19 billion.
Here are 7 interesting facts about the group’s latest earnings for the year ended 31 March 2021 and corporate developments that investors should know about.
1. Decrease in revenue and profits
The outbreak of Covid-19 has posted unprecedented challenges to the business. The social distancing restrictions and other precautionary measures has inevitably affected its operations.
During the financial year (FY) 2021, the Group’s revenue decreased by 12% year-on-year to HK$1,090 million from HK$1,241 million in the previous year. Profit attributable to equity holders of the company decreased by 21% year-on-year to HK$285 million from HK$360 in the previous year.
2. Hong Kong business update
During FY 2021, revenue contribution from the Hong Kong operation decreased by 26% year-on-year to HK$679 million from HK$913 million in FY 2020. Such decrease was primarily due to the Covid-19 pandemic which severely disrupted economic activities and the imposition by the Hong Kong Government for the compulsory closure of all beauty parlors in Hong Kong for 142 business days during FY 2021 (i.e. closure of 39% business days).
3. Overseas business update
With “Global Expansion” being paramount and intrinsic to the Group’s development, particularly given the tremendous potential that the overseas markets hold, the Group implemented relevant strategies for growing its global footprint.
During FY 2021, revenue generated from the Mainland China, Macau and Australia markets collectively recorded an increase of 25% year-on-year to HK$411 million in FY 2021, and thus accounted for 38% of the Group’s total revenue.
4. Strong liquidity position
The Group continues to maintain a strong financial position with bank and cash balance of approximately HK$499 million as at 31 March 2021, without external bank borrowing. Its gearing ratio as at 31 March 2021 was NIL.
The Group generally finances its operation with internally generated cash flows. Net cash generated from operating activities in FY 2021 was approximately HK$598 million. With the abundant bank and cash balance on hand, the Group’s liquidity position remains strong and it has sufficient financial resources to fund its future expansion and acquisition plans but at the same time to meet its working capital requirement.
The directors recommended a payment of a final and special dividend equivalent to HK12.0 cents per share and HK13.0 cents per share respectively for the year ended 31 March 2021. After taking into account an interim dividend of HK13.0 cents per share, a total annual dividend for the year ended 31 March 2021 will amount to HK38.0 cents per share.
The directors proposed that shareholders be given the option to receive the final dividend and special dividend in new shares in lieu of cash. The scrip dividend proposal is subject to: (1) the approval of the proposed final dividend and special dividend at the annual general meeting to be held on 13 August 2021; and (2) the Stock Exchange granting the listing of and permission to deal in the new shares to be issued pursuant to the scrip dividend proposal.
6. “Healthcare + Medical Beauty” platform
Since the outbreak, the general public has become more health conscious, as well as cautious about the quality and safety of healthcare services providers, gravitating towards those with a solid reputation and proven track record. Hence, the Group has embarked on offering a one-stop “Healthcare + Medical Beauty” platform that allays the fears of consumers who are unwilling to visit traditional clinics due to concerns over their higher rates of infectious disease transmissions.
The one-stop “Healthcare + Medical Beauty” constitutes a new direction for the Group as it moves away from traditional beauty services. As part of this migration, the Group will expand its service scope to include the provision of medical-related services, which are aimed at building customer loyalty, increasing average spending and facilitating value creation. Such services include Pain Relief specialty, and which observes the “4P Pain Management System”, comprising (i) Chinese medical practice; (ii) medical practice; (iii) chiropractic; and (iv) physiotherapists. Moreover, the latest medical and pain management equipment have been acquired to deliver an alternative pain management treatment that “avoids medication and surgery”. In addition, Hair Growth Specialty is another service under the “Healthcare + Medical Beauty” umbrella, central of which is the Regena Activa technology that has been accredited by the United States Food and Drug Administration.
In line with the Group’s change in scope of services, the Company’s name has been changed from “Perfect Shape Medical Limited” to “Perfect Medical Health Management Limited” with effect from 31 May 2021 as the latter more accurately reflects the current status of its development in the healthcare business, echoing its direction towards the future and enhances its corporate image.
7. Insider traders
Perfect Medical’s Chairman, Chief Executive Officer and Executive Director, Dr. Au-Yeung Kong had acquired from the open market a total of 2,032,000 shares for an aggregate consideration of approximately HK12.68 million at an average price of HK$6.24 per share from 16 April 2021 to 19 April 2021.
Dr. Au-Yeung further acquired in the open market a total of 1,300,000 shares for an aggregate consideration of approximately HK11.57 million at an average price of HK$8.90 per share on 2 July 2021.
Following the above purchases, Dr. Au-Yeung’s shareholdings had increased to approximately 71.97% of the issued share capital of the Company.
In the immediate future, Perfect Medical will further expand its service network, and this will include the opening of one-stop mega service centres in order to centralise personnel, equipment and resources, and thereby enhance sales and improve cost efficiency. Moreover, it will continue to open, expand or consolidate its service centres in core shopping districts and along major transportation hubs connecting Hong Kong, Mainland China, Australia and Singapore.
In the post-epidemic era, Mainland China customers have much higher expectations of premium service providers and be much more demanding for health and wellness tourism after a year of living with restrictions. Therefore, the Group can capture the growing number of Mainland Chinese visitors seeking medical-related service in Hong Kong.
The Group believes it has formulated a comprehensive service centre which the service of healthcare plus medical beauty can housed within same centre. The Group believes this “Healthcare + Medical Beauty” operational model can achieve the greater business synergy within its healthcare and beauty businesses and simultaneously enhance customers’ long term stickiness and lifetime value.
To meet the demand for “Healthcare + Medical Beauty” services, the Group plans to open 14 service centres on or before 1 October 2021. For the global expansion plan, these service centres will be strategically located at Hong Kong, Mainland China, Australia and Singapore, with total service area to be increased by 39% to over 322,000 ft.