TMC Life sees double-digit growth for new facilities


“We expect double-digit growth this year, in the high teens or even the low twenties, mainly because of our new hospital wing where we will be progressively opening up new facilities. “There will be a strong growth in the topline and operating profit,” says chief executive officer Nadiah Wan.

TMC Life Sciences Bhd is expecting the first fruits of labour from its expansion programme.

“We expect double-digit growth this year, in the high teens or even the low twenties, mainly because of our new hospital wing where we will be progressively opening up new facilities.

“There will be a strong growth in the topline and operating profit,” says chief executive officer Nadiah Wan.

But in terms of net profit, there will be a lot of depreciation in the first few years for all the new equipment, she said.

“So there will not be a very good growth here or even negative growth.

“But this is a normal part of ramping up the new capacity. Eventually we will break even,” Nadiah explains.

She points out that the breakeven period for the expansion may not be that long as the group is expanding on an existing hospital rather than building a new one.

The group expects its expanded Thomson Hospital Kota Damansara to begin operations in the third quarter of the financial year 2022 (FY22). The expansion would see the hospital’s bed count rising by 330 to 535.

“This new capacity is sufficient to meet the demand for the next three to four years. We will be opening the wards progressively,” Nadiah adds.

In its second quarter ended Dec 31, 2021, the hospital group saw its net profit jump 27.8% year-on-year to RM6.9mil while revenue rose 21% to RM59.2mil, mainly due to an increase in hospital and fertility revenue.

The group notes that the higher pre-tax profit was driven by improved revenue and lower depreciation in the second quarter.

“There is still a lot of demand for healthcare services in spite of the Omicron wave, so we are quite optimistic,” she says.

Another area of growth is expected to come from the potential reopening of borders to international visitors, says Nadiah.

In the years prior to the pandemic, the group counted on medical tourism, especially in the area of fertility treatment, as one of its pillars for growth.

Following the Covid-19 pandemic, the group’s plans for its Thomson Iskandar Hospital project in Johor appears to have taken a backseat due to lesser visibility of patients coming from Singapore.

“We are monitoring the situation in Johor. It is a little fluid there right now. We have, however, completed the piling works and have had the design approved by the Health Ministry,” she says.

Nadiah says TMC Life still has to obtain several more approvals for the Johor hospital including from the local council.

“We have committed publicly to complete this project within three to five years of the completion of the rapid transit system (RTS) in Johor, of which the government has said it is committed to continue,” she says.

“It’s critical for the opening of borders to happen for us to thrive. The connectivity with Singapore is very important for us. Our land is very close to the proposed Bukit Chagar RTS station,” she adds.

Nadiah says demand for its facilities is anticipated to rise even higher should the government presses on with its plan to reopen the country’s borders.

“In the short period when the vaccinated travel lane (VTL) with Singapore was opened, our in-vitro fertilisation clinic in Johor had seen a large influx of patients from Singapore. There is a pent-up demand,” she says.

“Although the VTL is now closed due to the rise in cases, we are optimistic as the government is planning for the reopening of borders. The long quarantine periods have been a dampener for medical tourists,” Nadiah adds.

With the recent capacity expansion at its Kota Damansara hospital, the group will also soon be able to offer higher margin diagnostic services.

This would be a new growth area for TMC Life that would help propel earnings.

The capital expenditure that has been allocated for the expansion and upgrade in tertiary service offerings is RM469mil, which covers the construction and acquisition of necessary equipment and IT infrastructure systems.

“The expansion is not just an addition of beds as we are adding more tertiary services too. What stands out is nuclear and cancer medication.

“We will be opening the radiotherapy and nuclear medicine services in Kota Damansara that will drive revenue growth,” Nadiah says.

“These are complex services with a bigger-than-average hospital bill size. Cancer incidences are increasing in Malaysia, especially breast, colorectal and lung cancer.

“We anticipate catering to this demand will be a good opportunity for us,” she adds.

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