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TMC Life – A Must Have Heathcare Stock in You Portfolio



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Jul 16 2007
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Health-care is probably one of the most-ignored sectors when one talks about stocks investing, particularly in developing countries, including Malaysia. If you care to spend a couple of minutes looking at health-care, hospitalization or drugs-related stocks in developed countries such as U.S. or Britain, you would be amazed with how good profits this sector is bringing home to the investors.

And when you have players exploring the niche medical area such as stem-cells banking, you just can’t ignore the opportunity to take part investing its stocks. Having said that, I’ve to admit I should not have disposed of my earlier investment in StemLife Berhad (KLSE: STEMLFE, stock-code 0137) when I Locked-In Profit – STEMLIFE back in Oct-2006. But there was no way that I know StemLife stock would skyrocket to the current price of more than RM4.00 per share. On the consolation side, I’m still holding a small amount of Stemlife shares as long-term investment.

On the other hand, another up-coming stem-cell player is none other than TMC Life Sciences Bhd (KLSE: TMCLIFE, stock-code 0101). TMC Life is currently relying on Cyro-Cord as its partner in providing the stem-cells banking service to complete the total solution. Although TMC Life has laid the roadmap to have its own stem-cells facility months ago, it’s still not operational yet. But you shouldn’t wait till the chicken is hatched before decided to take part in this stock.

TMC Life’s Key Person

The main selling point in TMC Life is definitely on one person – the founder, Dr Colin Lee who has transformed the company into a leading fertility center in Malaysia. As the Managing Director, Dr Colin, who has 25 years of medical practice experience, is still practicing his profession in his ever-crowded main hospital in Damansara Utama. When Dr Colin is not available, Dr Wong Pak Seng, who is also the Executive Director of TMC Life would be the acting general.

To gauge how good the business is, one has to pay a visit to the center during weekday and weekend – patients have been commenting (or complaining?) on the long-queue to seek consultation from Dr Colin or his team of 6 (six) doctors on top of 7 (seven) resident embryologists and 2 (two) urologists . Guess good things don’t come fast and cheap.

TMC Life’s Fundamental

Revenue has been on the uptrend since financial year 2001. Net profit has also registered a healthy and consistent growth from 2001 till 2006. For the financial year 2007, TMC Life is expected to register revenue of RM 32.5 million and net profit of RM 11 million. TMC has been consistently declaring dividend of 1 sen per share since financial year 2005 and is expected to declare the same for the financial year 2007. Earnings per share (EPS) since 2004 are 3.4 (2004), 4.6 sen (2005), 5.3 sen (2006) and 6.9 sen (2007, estimated).

As of time of writing, TMC Life stock is trading at RM1.70 per share – the share is attracting buyers who are willing to invest in the shares at PE (price earning ratio) of 24.4 times the projected financial-year-2007. This is well above the regional health-care stocks PE of 20.0 times.

TMC Shares on Accumulation Phase

While StemLife’s main forte is in stem-cell storage and making more than 50% profit margin out of it, TMC Life business model depends very much on human capital. That could be the reason why TMC Life stock price was lagging compare to StemLife. The story is about to change judging from the stock movement of TMC Life since last Friday. Looking at the technical chart, you can basically see two strong shares accumulation phases (I called it “First Leap” and “Second Leap”) since the IPO.

The “First Leap” occurred on Jan 19th, 2007, when it crossed the resistance of RM 1.00 per share with relatively high volume. For the next half-a-year, the stock price was in the trading-range of between RM1.00 to RM1.24 – a rather boring period. However, if last Friday is any event to goes by, it could be the most promising “accumulation” stage ever recorded by TMC Life. This “Second Leap” is definitely the leap of faith with the mind-boggling volume of over 23 million shares transacted on the open market. It sparked my basic-instinct if someone was and is on the buying spree. I would like to stress here that Tan Sri Quek Leng Chan, the tycoon of Hong Leong Bank is the strategic shareholder with about 14.53% stake in TMC Life.

Moving Forward

The rally in TMC Life stock price since last Friday will definitely make investors who had ignored this small but highly potential company to raise the alarm and consider adding it into their portfolios. Remember that sector diversification is the name of the game if you want to make smart money investing stocks.

Nevertheless, there’re some known potentials that you should know which might make this stock highly explosive, among others:

  • The potential earnings from the still-under-construction Tropicana Medical Center were NOT included into earnings growth of TMC Life. The new 120-bed hospital is expected to be operational in early 2008 and an estimated 40 (forty) doctors are expected to be on the new payroll.
  • Revenues from stem-cell business should comes very handy to investors who choose to believe that the success of StemLife could be duplicated the same way here in TMC Life, not to mention the high profit margin in such cell-banking facility. With the ever-loyal and satisfied clients, the mouth-to-mouth advertisement of the professionalism and proven TMC solution would eventually turn the patients into ready-customer for the stem-cell banking business.
  • Tapping into Indonesia market – TMC Life which has six representatives office in Indonesia is hoping to capture more Indonesian clients, which are contributing 34% of foreign revenue in 2006.

I’ve no problem believing that this stock should be upgraded to Main Board very soon based on its’ strong fundamental and business model since its listing on the MESDAQ in Oct-2005.

# TIP: Consider TMC Life stock as your long-term investment. When the price reaches the level of current stock price of StemLife, you would probably laughing your way to the bank.

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Comments

Hi stocktube!

I hope you are doing all well. Learned that you have managed to make some gains from the volatility in Apple stock lately. Ha ha… well done! iPhone is not out in the UK yet, so I am still waiting for it. Yes, I do think they are going to come out with a cut-down or nano version in the future.

Enjoy reading this post of yours about TMCLIFE very much. Just want to say that I have also created a link to this post from my blog.

Best wishes
Boon

Thank you for your detail analysis.
Mr Quek actually disposed of quite substantial amount of TMC life on 26.6 2007 but filing on 29.6.2007,it went down the next few days and presented a good opportunity to buy.

I have writen something on TMC before at the sahamas
http://sahamas.net/forum5/114html

tanhin

hello boon,

what else can i say about apple, even today’s news talked about how apple is a good example of the new business comcept painted in the famous book “blue ocean strategy” … steve jobs simply rocks … i do hope the iphone will be available in uk soon – it would be damn cheap going by the local pound sterling currency … i’m sure you made good profit with your trading as well …

thanx for the link boon … i just found out there’s spelling mistake with the title but i guess it’s too late by now, should be “healthcare” and not “heathcare” … sorry …

hello tanhin … glad you enjoy the post … the link provided could not be access/broken …

care to re-submit your link again?

i’m guess you’re one of the fans of tmc life then …

cheers

sorry,

a silly mistake

it should be http://sahamas.net/forum5/114.html

tanhin

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