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Tuesday, June 24, 2025

Is Medcorp IPO a good investment?

by

Anthony Wilson
19 days ago
20250605

Around the world, ini­tial pub­lic of­fer­ings (IPOs) of shares in pub­lic com­pa­nies are pop­u­lar among in­vestors be­cause they present the po­ten­tial for high re­turns, es­pe­cial­ly if the IPO is priced at a dis­count to its in­trin­sic val­ue. IPOs al­so present an op­por­tu­ni­ty to in­vest in com­pa­nies that are do­ing dif­fer­ent things or do­ing things dif­fer­ent­ly. And third­ly, IPOs al­low for the di­ver­si­fi­ca­tion of an in­vestor’s port­fo­lio.

For most in­di­vid­ual lo­cal in­vestors, an IPO at this time is par­tic­u­lar­ly use­ful, giv­en the de­cline in the lo­cal stock mar­ket for the last three years.

Last year, ac­cord­ing to the Trinidad and To­ba­go Stock Ex­change’s lat­est an­nu­al re­port, “the lo­cal eq­ui­ty mar­ket faced a chal­leng­ing en­vi­ron­ment, with most list­ed se­cu­ri­ties record­ing year-on-year price de­clines. This broad-based de­cline weighed heav­i­ly on the mar­ket in­dices.

“The Com­pos­ite In­dex fell by 11.60 per cent, clos­ing at 1,073.23, while the All T&T In­dex de­clined by 12.74 per cent, end­ing the year at 1,580.25. The Cross-List­ed In­dex al­so saw a con­trac­tion of 7.74 per cent, clos­ing at 74.28. No­tably, how­ev­er, the SME In­dex con­tin­ued its up­ward tra­jec­to­ry for a third con­sec­u­tive year, in­creas­ing by 30.91 per cent to end at 92.58.”

Giv­en the per­for­mance of the SME In­dex last year, it is no­table that the first IPO for 2025 is Med­corp, which pro­pos­es to be list­ed on the SME mar­ket.

Med­corp is an op­er­a­tor of pri­vate health­care fa­cil­i­ties lo­cat­ed in north-west Trinidad, com­pris­ing:

* St. Clair Med­ical Cen­tre (for acute care and spe­cialised fa­cil­i­ties);

* Good­health Med­ical Cen­tre (for pre­ven­ta­tive and am­bu­la­to­ry care);

* The Bri­an Lara Can­cer Treat­ment Cen­tre (for on­col­o­gy, ra­dio­ther­a­py and chemother­a­py); and

* Doc­tors Ra­di­ol­o­gy Cen­tre (for di­ag­nos­tic imag­ing).

There are sev­er­al key fea­tures to the Med­corp of­fer­ing of which po­ten­tial in­vestors in the com­pa­ny’s IPO should be aware:

1) Med­corp is a prof­itable com­pa­ny.

For the year end­ed De­cem­ber 31, 2024, the com­pa­ny de­clared prof­it be­fore tax of $48.17 mil­lion, its tax­a­tion charge was $6.82 mil­lion (which is 14.24 per cent of its prof­it be­fore tax) and its af­ter-tax prof­it was $41.30 mil­lion.

Ac­cord­ing to the Med­corp prospec­tus, its net prof­it mar­gin in its last four fi­nan­cial years was: 33.8 per cent—2024; 44.9 per cent—2023; 19.7 per cent—2022 and 21.4 per cent in 2021.

Med­corp’s net prof­it mar­gin was ad­just­ed in 2023 be­cause “ma­jor share­hold­ers elect­ed to waive their div­i­dend en­ti­tle­ments as part of the strate­gic prepa­ra­tion for Med­corp’s SME list­ing. When nor­malised for this non-re­cur­ring event, FY2023’s ad­just­ed net prof­it mar­gin was 20.8 per cent, con­sis­tent with his­tor­i­cal per­for­mance.”

There was al­so an ad­just­ment to the net prof­it mar­gin in Med­corp’s 2024 fi­nan­cial year as the com­pa­ny amal­ga­mat­ed with its 100 per cent owned sub­sidiaries. That led to the com­pa­ny re­duc­ing its stat­ed cap­i­tal to im­prove the flex­i­bil­i­ty of the com­pa­ny’s cap­i­tal struc­ture and fa­cil­i­tate fu­ture cap­i­tal needs and re­turns to share­hold­ers.

“The share­hold­ers sub­se­quent­ly waived their right to re­ceive the full amount by which the stat­ed cap­i­tal was re­duced and agreed to have this amount cred­it­ed to the amal­ga­mat­ed com­pa­ny’s prof­it or loss,” ac­cord­ing to the prospec­tus. The ad­just­ed mar­gin in 2024 was 12.6 per cent.

2) Healthy div­i­dends

For the year end­ed De­cem­ber 31, 2023, cer­tain share­hold­ers to whom div­i­dends were owed amount­ing to $30,694,185, ir­rev­o­ca­bly waived their right to re­ceive the out­stand­ing div­i­dends. That means the com­pa­ny de­clared $30.69 mil­lion in div­i­dends and “cer­tain share­hold­ers” de­cid­ed to waive their right to re­ceive the out­stand­ing div­i­dends there­after.

The com­pa­ny al­so de­clared div­i­dends of $29.92 mil­lion in 2024.

In its prospec­tus, Med­corp states that it will pay a div­i­dend twice a year and the pay­out would be be­tween 30 and 70 per cent of its af­ter-tax prof­it.

3) Good ra­tios

Based on Med­corp’s $41.30 mil­lion af­ter-tax prof­it in the fi­nan­cial year end­ed De­cem­ber 31, 2024, and with 7,479,977 shares in is­sue, the com­pa­ny’s earn­ings per share was $5.52 and its price to earn­ings (P/E) ra­tio for that pe­ri­od was 8.69X. That would be $48/$5.52.

If there is full sub­scrip­tion of the 350,000 shares on of­fer in the IPO at $48 per share, the earn­ings per share would be $5.28 and the PE ra­tio would be 9.10X.

Med­corp speaks

In a state­ment to the Busi­ness Guardian last Fri­day, Med­corp said the com­pa­ny has been the pi­o­neer in health­care de­liv­ery for years and is seek­ing to pro­vide a unique op­por­tu­ni­ty for in­vestors to di­ver­si­fy their port­fo­lios in­to an es­sen­tial sec­tor that has his­tor­i­cal­ly demon­strat­ed re­silience dur­ing eco­nom­ic fluc­tu­a­tions.

“The way we see it, this IPO is sim­ply ex­tend­ing that lead­er­ship in­to the fi­nan­cial mar­kets. We’re of­fer­ing some­thing tru­ly dis­tinc­tive—the chance to own a stake in health­care de­liv­ery with­out the enor­mous cap­i­tal re­quire­ments of build­ing hos­pi­tals or buy­ing ex­pen­sive med­ical equip­ment.

“Re­gard­ing the tim­ing, we’re at an in­flec­tion point in our growth jour­ney. The ex­pan­sion of our new wing at Good­health Med­ical Cen­tre and con­tin­u­ing in­vest­ments in cut­ting-edge tech­nol­o­gy re­quire cap­i­tal, and this IPO pro­vides that while po­si­tion­ing us for con­tin­ued ex­pan­sion. Ad­di­tion­al­ly, we will re­main vig­i­lant re­gard­ing po­ten­tial ac­qui­si­tion op­por­tu­ni­ties that align with our strate­gic ob­jec­tives and val­ue-cre­ation cri­te­ria. Be­yond our do­mes­tic ini­tia­tives, we will con­tin­ue to de­vel­op med­ical tourism op­por­tu­ni­ties, strate­gic re­la­tion­ships, and satel­lite op­por­tu­ni­ties with­in the Caribbean re­gion. The TTSE has pro­vid­ed us with ad­di­tion­al ca­pac­i­ty with­in our ap­proved cap for fu­ture is­suances, giv­ing us flex­i­bil­i­ty as we grow.

“The ini­tial of­fer­ing may be per­ceived as a lim­it­ed num­ber of shares, but our ap­proach is de­lib­er­ate. Our val­u­a­tion re­flects our mar­ket lead­er­ship, unique po­si­tion­ing, and com­pre­hen­sive ser­vice of­fer­ing. We’ve struc­tured our is­suance this way to en­sure strong per­for­mance up­on mar­ket en­try.

“The tax in­cen­tives avail­able to com­pa­nies that list on the TTSE SME mar­ket (the mar­ket on which Med­corp’s shares will be list­ed) should en­hance our prof­itabil­i­ty be­yond what his­tor­i­cal fi­nan­cials might sug­gest. Ad­di­tion­al­ly, be­ing pub­licly trad­ed brings three key ben­e­fits that di­rect­ly im­pact our bot­tom line:

“First, en­hanced brand recog­ni­tion. When we be­come a pub­licly trad­ed en­ti­ty, our in­sti­tu­tion­al pro­file is el­e­vat­ed sub­stan­tial­ly. This strength­ens pa­tient trust and stake­hold­er con­fi­dence, which we ex­pect to trans­late di­rect­ly in­to in­creased pa­tient vol­ume and rev­enue.

“Sec­ond, tal­ent ac­qui­si­tion. As a pub­lic com­pa­ny, we can at­tract and re­tain the best pro­fes­sion­als who want to de­liv­er both clin­i­cal ex­cel­lence and or­ga­ni­za­tion­al sta­bil­i­ty. Hav­ing the best health­care pro­fes­sion­als means bet­ter care, bet­ter out­comes, and ul­ti­mate­ly, bet­ter fi­nan­cial per­for­mance.

“Third, in­no­va­tion fund­ing. On­go­ing ac­cess to cap­i­tal mar­kets en­sures we can con­tin­ue in­vest­ing in med­ical in­no­va­tions that im­prove pa­tient out­comes. When we pro­vide cut­ting-edge treat­ments not avail­able else­where in T&T, we be­come the des­ti­na­tion of choice for spe­cialised care, ex­pand­ing our mar­ket share and rev­enue streams.

“We’re par­tic­u­lar­ly ex­cit­ed about cre­at­ing op­por­tu­ni­ties for health pro­fes­sion­als and oth­ers in the health­care in­dus­try to build valu­able re­la­tion­ship net­works through in­vest­ment. By be­com­ing share­hold­ers, in­dus­try pro­fes­sion­als can strength­en con­nec­tions while par­tic­i­pat­ing in our fi­nan­cial suc­cess.

“This is al­so an in­vest­ment that res­onates on a per­son­al lev­el. Health­care touch­es every­one’s lives—we all re­quire med­ical ser­vices, and these needs on­ly in­crease as we age. By in­vest­ing in Med­corp, share­hold­ers are sup­port­ing an in­sti­tu­tion that has sig­nif­i­cant­ly re­duced the need for cit­i­zens to seek med­ical care abroad. Qual­i­ty health­care is now avail­able right here at home.

“Fur­ther­more, Med­corp rep­re­sents in­sti­tu­tion­al sta­bil­i­ty and con­ti­nu­ity. We are here for the long term. Our suc­cess doesn’t de­pend on any sin­gle in­di­vid­ual or small group of peo­ple. We’ve es­tab­lished ro­bust man­age­ment struc­tures and a sus­tain­able op­er­a­tional mod­el that will con­tin­ue as a lega­cy for gen­er­a­tions to come. This in­sti­tu­tion­al strength is pre­cise­ly what makes us an at­trac­tive mar­ket op­por­tu­ni­ty.

“This IPO rep­re­sents a sto­ry of lega­cy, growth, and in­no­va­tion. We refuse to rest on our lau­rels. To ad­vance health­care in Trinidad and To­ba­go, we must ex­pand our ca­pa­bil­i­ties and em­brace new ap­proach­es. This pub­lic of­fer­ing al­lows us to pur­sue ex­cit­ing ini­tia­tives while em­brac­ing the trans­paren­cy and ac­count­abil­i­ty that come with be­ing a pub­lic com­pa­ny.

“As good cor­po­rate cit­i­zens, we recog­nise our role ex­tends be­yond busi­ness op­er­a­tions. We’re proud to con­tribute to the na­tion­al in­vest­ment land­scape, cre­at­ing op­por­tu­ni­ties for cit­i­zens to build wealth while sup­port­ing vi­tal health­care ser­vices. This IPO isn’t just about Med­corp grow­ing—it’s about ex­pand­ing the op­por­tu­ni­ties for T&T’s in­vestors and health­care com­mu­ni­ty to grow along­side us.

Dis­clo­sure: The au­thor of this com­men­tary is not a fi­nan­cial an­a­lyst. Noth­ing in this piece should be con­strued as pro­vid­ing fi­nan­cial ad­vice to any po­ten­tial in­vestors, who are urged to seek such ad­vice from pro­fes­sion­als.


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