isec crowd7.17Dr Lee Hung Ming, executive vice-chairman of ISEC, at an investors meeting this week. Photo by Sheryl SimHealthcare businesses typically command relatively high PE valuations. Some things about them usually justify that, including resilient, recurring revenue and high barriers to entry.

The latter was touched on this week at an investors' meeting by ISEC Healthcare's executive vice chairman, Dr Lee Hung Ming, when he described how long it takes for one to qualify as an eye specialist.

In Singapore, aspirants take 6 years to complete their medical degree course, and another 6 years to qualify as an eye specialist. 

ISEC Healthcare

Share price:
32 c

40 c
Source: Maybank KE

In neighbouring countries, there is a shortage of ophthalmologists. In Malaysia, the ratio is 0.01 ophthalmologist per 1,000 people, which is a quarter the rate in Singapore. 

In Myanmar, there is a dire shortage of eye specialists. Most specialists there are in government service, thus there is tremendous scope for private services to grow. 

Stock price 

32 c

52-week range

27.5 – 35.5 c

PE (ttm)


Market cap

S$165 m

Shares outstanding

517 million

yield (ttm)


Year-to-date return


Source: Bloomberg

Back to valuation: ISEC, which is principally a medical eye services provider, trades at a trailing PE of about 24x.

Reflecting the high-barrier-to-entry nature of its business, its gross margin hovers around 47% and net margin, 20%.

These solid margins may partly be attributed to the short time that eye procedures are completed (with fees that run into thousands of dollars). It takes just 15 minutes to do Lasik for a pair of eyes and 15 minutes to do a cataract case. 

Like any listed company, ISEC is expected by investors to seek business growth. Since its listing on Catalist in 2014, ISEC has made the following two acquisitions: 




Total cost (S$’m)


Share (S$’m)

Acquisition PE

Specialist Eye


Dec 2015





JL Medical Clinics


Dec 2016





leehungming7.17Dr Lee Hung Ming is the controlling shareholder of ISEC. For more on him, click this story.
Photo by Leong Chan Teik
Dr Lee pointed out that ISEC had S$21 million of cash (and zero debt) as at end-March 2017. That can allow ISEC to acquire 4 or 5 established practices, assuming ISEC ....

♦ Pays 50% cash and 50% in ISEC shares,
Pays around 10x earnings.

Acquisitions aside, ISEC is looking to start new centres (ie greenfield) in Malaysia, "as there is a lot of room to grow there," said Dr Lee.

He cited the Penang centre, which opened two years ago and enjoyed about 40% y-o-y growth in revenue last year.

Its Sibu (Sarawak) centre opened in March this year. ISEC currently has centres also in KL and Malacca, and envisions having a centre in every state of Malaysia.

It already is the largest private eyecare service provider in Malaysia, said Dr Lee.

In Singapore, ISEC seeks out doctors to join its existing centres -- or M&A.

For more, see Maybank Kim Eng's report.

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