Union Medical Healthcare sets aside around HKD 400m for M&A war chest
Union Medical Healthcare [UMH, HKG:2138], a Hong Kong-based aesthetic medical services group, has set aside around HKD 400m (USD 51m) for potential acquisitions in the next 12 months, according to Chief Operating Officer Gabriel Lee.
The company would look at a wide range of targets related to its core business, ranging from aesthetic medical service providers, hair treatment centres, healthcare management and dental clinics, he said.
Preferred targets are those that have physical outlets and client bases in China or Hong Kong. Both single outlet and chains would be considered, depending on the client base, safety and financials, Lee said.
The price-to-earnings ratios of the targets should be lower than the company’s ratio of 16.76x, he said.
Targets with other premium product brands that can facilitate cross-selling are also on its radar. European or US travel agencies, eyewear and accessories brands are examples, he continued.
The company could consider a share swap or share placement to fund future acquisitions, to provide incentives for targets that have doctors working as service providers, Lee said. UMH mainly used cash to fund previous acquisitions, he said. It had HKD 333m (USD 42.8m) cash on hand as of 30 September 2017.
UMH expects to see a 40% growth in foor space in the next financial year which ends in March 2019, Lee said. It had 183,000 square feet as of end-September 2017, according to its interim financial report. It had 46 stores for the period.
It plans to open stores in Eastern and Southern China due to the higher disposable incomes of consumers there and also this area is closer to Hong Kong, he added.
Lee expects a double-digit growth in revenue for the next financial year based mainly on organic growth. On top of that, M&A has increased the company’s growth especially after its listing, he added.
The company completed the majority stake acquisition of two dental service providers, as announced on 29 December. The two dental companies run a total of six dental clinics with 11 dentists as of mid-December, an exchange filing said.
UMH also acquired the Hong Kong and Macau franchise of beauty product “Swissline” and a Spanish consumer chain which designs fashion accessories and operates a retail chain in Hong Kong, according to a separate filng in mid-November.
It had about 54,000 clients as of 30 September 2017, up 80% from a year ago. Average spending for key clients could reach up to HKD 60,000 per year, Lee added. With a market capitalization of HKD 3.45bn, the company reported net proít of HKD 125.51m in the six months ended 30 September 2017, up 71% from the same period a year earlier, according to its interim report.
by Ayishah Ma in Hong Kong