Tuesday, July 23, 2013

TMCLife- benefitting from healthcare play


TMCLife Sciences Bhd ("TMCLife') is essentially involved in the operation of a 180-bedded medical centre that provides complete services for fertility, women & children health. That medical centre is known as Tropicana Medical Centre, Kota Damansara.

Recent Financial Results

TMCLife's financial performance continued to improve due to the operation of the medical centre. However, the latest result for QE31/5/2013 showed a drop in net profit when compared to the earlier 3 quarters because it does not include any exceptional gain from the disposal of assets or interest in Stemtech International & other subsidiaries.

Table: TMCLife's last 9 quarterly results

Chart 1: TMCLife's last 9 quarterly results


TMCLife (closed at RM0.46 yesterday) is now trading at a PE of 96 times (based on annualized EPS of 0.48 sen). A report by NetResearch Asia (here) put the EPS for FY2013 at 1.3 sen. Based on this, TMCLife's forward PE is about 35 times. While this looks expensive, it is deemed acceptable for a start-up venture.

Technical Outlook

TMCLife broke above its downtrend line at RM0.32 in October 2012. Since the breakout, the share price has inching higher in an intermediate uptrend line, SS. Its upside has however been capped by the horizontal line at RM0.42-0.43. The stock broke above that resistance yesterday. Its next resistance would be at RM0.47 & then at RM0.51.

Chart 2: TMCLIfe's  daily chart as at July 22, 2013 (Source: quickcharts)

Chart 3: TMCLIfe's monthly chart as at July 22, 2013 (Source: quickcharts)


Based on improving financial performance & positive technical outlook, TMCLife could still a good stock for trading BUY. Its valuation is understanding high for a start-up but it may benefit from the long-term trend of higher spending on healthcare. 

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, TMCLife.

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