Healthway Medical: Growing a defensive business

Healthway Medical has taken definite steps to expand into China with their platform in Shanghai. It has recently proposed to issue rights for further expansion into other Chinese cities. It will not remain purely a Singapore brand for long.

Healthway has been clever to identify and fill areas in healthcare services which are underserved. Their business model also creates strong cashflow. This gives a solid foundation for growth without being too reliant on financing.

Healthway has a historical PE of 13 (@13c). Parkway has a historical PE of 54.8 (@$2.41). RMG has a historical PE of 21 (@$$1.39). Figures by DBS Vickers. Parkway's 2010 forecast PE is 22. RMG's is 18. There is no forecast for Healthway.

However, if I were to hazard a guess, Healthway's PE would improve at the same pace as RMG's, if not more, looking at both parties' 3rd quarter results.

I know that the management has proven themselves so far to be astute and aggressive. The business is a defensive one with stable and growing demand. The management is not resting on its laurels and have grown the business rapidly. The business model enjoys a strong cashflow. Directors are committed to the business and have opted for scrip dividends instead of cash. This has diluted the NAV per share to <9c though. Healthway is a growth company in a defensive business. This combination, in my experience, if led by a strong, business minded management, is one for success. Healthway Medical's growing in China