Hong Kong, Feb 13, 2009 AEST (ABN Newswire) - Town Health International Holdings (HKG:3886) CFO Dr. Ronnie K W Hui revealed their company plan for 2009 and his view on the global economy in an interview with ABN Newswire.
The company strategy for 2009
The company will continue its expansion strategy as previously planned. It was decided that the company would not pursue an aggressive expansion plan in Hong Kong, and would not strive to expand the size of its chain clinics network. This is because we believe that the current business size has already achieved significant degree of economies of scale and scope advantage, and there is thus no need to aggressively expand our scope in Hong Kong. On the other hand, efforts would be made to further streamline our operation in HK so as to improve further the operating efficiency. Also, the company will strive to capture more value and revenue from its large client base through cross referrals and cross-selling of other healthcare products. Services like skin beauty, hair transplant, or selling of health related products would be introduced to our existing clients so as to generate more revenue from the existing operation.
The company's China operation has been going smooth. After months of hard work, the company is close to opening its first integrated clinic in China. The company will invest heavily and push forward strongly on its China chain clinic project in collaboration with Ping An Insurance Group and Sun Yat San university. The target is to open 10-20 chain clinics in Pearl River Delta region in 2009.
Given that the company has literally no debt, and is cash rich with several hundred millions cash on hand, we would carefully scrutinize all investment opportunities this year to buy in growth. The financial tsunami has provided the company lots of investment opportunities. Acquisition deals are now priced very reasonably. Selling prices of shopping mall properties are also very attractive. The company will therefore seize this golden opportunity to acquire good investments so as to capture a good future growth potential.
The CFO view on the global economy and its impact to the company
In my view, this financial tsunami is not as dreadful as it has been described by the government. To say that this is the most severe global financial storm in the past hundred years is definitely overblown. When comparing with the 1929 Great Depression, when there was bankruptcy of over 8000 banks, and unemployment rate shot up to 25%, the current US situation is definitely in a much better shape. Up till now, there has been only 20-odd banks collapsed, and unemployment is expected to peak at around 8-10%. Most importantly, the central banks around the world have learnt the lesson from the past, in particular the Great Depression and the lost decade of Japan in the 90s. All central banks have been pursuing very aggressive monetary policies to combat the deflationary deleveraging force. The interest rate of the US is now close to zero, and there have been much talks on "Quantitative Easing", which in fact is tantamount to printing money aggressively. The recent data also suggested that the money supply has stopped collapsing and started expanding, albeit at a very slow pace. With this backdrop, it is hard to imagine that the global economy would go into a protracted period of severe depression. Most importantly, it is very unlikely that the global economy will enter into a phase of protracted deflation. Short period of deflation is possible but it would be unimaginable that the whole world would suffer from long period of structural deflation, given this super-loose global monetary condition.
As HK has gone through the most difficult time of deflation in the aftermaths of Asian Crisis, for a total of 6 years and magnitude of 18%, we have experienced the most difficult times not so long ago. In comparison, I believe HK would fare much better this time as compared with the Asian Crisis. Two major reasons would account for that. Firstly, the real interest rate has been very low, thanks to the shallow deflation, if any, and the ultra-low nominal interest rate which is close to zero. In that situation, the asset prices like property prices or stock market would not be subject to severe deflationary pressure. Secondly, with China as the major backup of HK's economy, HK could enjoy the support from our motherland that elsewhere of the world could not.
For the company, the impacts of this financial tsunami are not much. Healthcare has always been regarded as the defensive industry at times of economic downturn, as healthcare needs are necessity of most citizens. Therefore, the company does not anticipate major setbacks on its operation. On the other hand, the government public healthcare policies matter most to the private healthcare market. The public healthcare sector is now dominating 93% of all inpatient market, and 30% of all outpatient market. As such, they are the major player and competitor of the healthcare market in HK. Changes in government policies would therefore affect the business of private healthcare industry. The HK government has explicitly stated that it would cap its public healthcare spending, and resources would be spent in better utilizing the private healthcare services. Recently launched initiatives like healthcare coupons for elderly and vaccination coupons for children are good cases in point. We believe that the change in government policies will bode well for the private healthcare industry for the next 5 to 10 years to come, and that also would certainly be conducive to the company's future business growth.
About CFO Dr Ronnie, K W Hui
Dr Ronnie, K W Hui, CFO & Executive Director, is a registered paediatrician, as well as the CFA charterholder, with MBA qualification. Dr Hui is one of the rarity in HK and elsewhere of the world who possesses both a medical degree and the CFA charterholder. Dr Hui is now CFO & Executive Director of Town Health International Group, Finance (Executive) Director of HK Health Check & Laboratory Holdings Group, and Chairman & CEO of Core Healthcare Investment Holdings. He is also the Independent Non-executive Director of two other listed corporations.
Contact
Mr. Arthur Ling
Director/Investor Relations
Town Health Int'l Holdings Co Ltd (HKG:3886)
Shop 1A-C, Level 1, Hilton Plaza Commercial Centre
3-9 Shatin Centre Street
Shatin, N.T.
Contact No: +852-2699-8266
E-mail: arthur.ling@townhealth.com
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