Metro Healthcare Berhad Launches IPO, Subscription Opens on 24th October 2024

The company was incorporated in Malaysia on 23 June 2010 and currently operates as an investment holding entity. Through their subsidiaries, they are principally an O&G (obstetrics and gynecology) healthcare service provider, specializing in providing fertility and other O&G healthcare services. The Group also offers paediatrics services to complement its O&G healthcare services. As of the latest practical date (LPD), the company operates 16 facilities located in the central, northern, and southern regions along the west coast of Peninsular Malaysia.

The primary market in which the company operates is Malaysia, with the majority of its patients being Malaysian, contributing over 90% of the company's revenue. Less than 10% of the group's revenue comes from foreign patients.

Their business models are as follows:

Based on the IPO Price of RM0.25, the total gross proceeds of RM39.156 million from the  public issue will be used by the company in the following manner:

The company plans to allocate RM25 million from its listing proceeds to expand its presence in Klang Valley and Peninsular Malaysia by acquiring additional maternity hospitals. RM17 million is earmarked for a specific hospital acquisition in Klang Valley, equipped with comprehensive facilities similar to existing ones. Discussions are underway with the vendor, and an independent valuation will be conducted. The remaining RM8 million is reserved for potential further acquisitions or establishing new IVF centers and specialized clinics across Peninsular Malaysia.

The company plans to allocate RM3 million, about 7.66% of listing proceeds, to refurbish and upgrade three maternity hospitals and install a centralized hospital information system (HIS) across its facilities. The refurbishments aim to enhance patient experience and operational efficiency. Costs include RM610k for HWM Klang, RM1.09M for HWM Banting and MMKS, RM750k for a hospital to be acquired, and RM550k for HIS installation.

The company has shown steady financial growth, with revenues increasing from RM42.26 million in FYE2021 to RM44.69 million in FYE2023. This growth represents a compound annual growth rate (CAGR) of approximately 2.83%, indicating the company's consistent market expansion. However, Gross Profit (GP) has experienced a slight decline, falling from RM20.09 million to RM18.08 million over the same period, suggesting a potential need for further optimization in operations or cost control measures.

Profit Before Tax (PBT) has seen a decrease, declining from RM12.60 million to RM8.54 million. Profit After Tax (PAT) has also seen a decline, falling from RM9.44 million in FYE2021 to RM6.25 million in FYE2023.

For the financial period ending (FPE) 2024, the company has continued to sustain its financial momentum, reporting revenues of RM24.48 million, a Gross Profit (GP) of RM10.74 million, a Profit Before Tax (PBT) of RM5.15 million, and a Profit After Tax (PAT) of RM3.54 million.

O&G healthcare services are a branch of medicine that specialises in the medical and surgical care of women. It comprises fertility as well as obstetrics and gynaecology (herein referred to as “other O&G”) services, as illustrated below, Metro Group provides all 3 types of O&G healthcare services.

The industry size for the fertility, obstetrics and gynaecology services industry can be depicted by revenues of specialised O&G healthcare service providers offering fertility and/or other O&G services.

Between 2018 and 2023, the fertility, obstetrics and gynaecology services industry size in Malaysia illustrated growth at a compound annual growth rate (“CAGR”) of 14.2%, growing from RM176.7 million in 2018 to an estimated RM343.5 million in 2023.

Moving forward, the fertility, obstetrics and gynaecology services industry size in Malaysia is expected to grow at a CAGR of 11.0% between 2024 and 2026 to reach RM469.6 million in 2026.

Based on the fertility, obstetrics and gynaecology services industry size of RM283.3 million and Metro

Group’s revenues generated from its O&G healthcare services segment of RM39.4 million in 2022, the

group is estimated to have garnered an industry revenue share of 13.9% in 2022. Based on the estimated

fertility, obstetrics and gynaecology services industry size of RM343.5 million and Metro Group’s revenues

generated from its O&G healthcare services segment of RM44.0 million in 2023, Metro Group is estimated

to have garnered an industry revenue share of 12.8% in 2023.

This IPO offers 156,625,000 new ordinary shares. The shares will be allocated as follows:

– 27,472,600 new shares made available for application by the Malaysian public;

– 9,789,200 new shares made available for application by eligible directors and employees as well as persons who have contributed to the success of Metro and its subsidiaries;

– 122,363,200 new shares to be placed privately with Bumiputera investors approved by the Ministry of Investment, Trade and Industry, Malaysia.

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