Singapore O&G’s 2018 AGM

SOG is one of the largest positions within my portfolio so I attended the Singapore O&G (SOG) annual shareholder meeting yesterday. Here are the key highlights:

  1. SOG market share for baby deliveries increased from 8.0% to 8.9% in 2018. While Dr Heng delivered the most babies within the group, it was the younger O&G doctors who have been driving growth in 2018. This is good news because it reduces dependence on the founding doctors.
  2. Management is aiming to achieve 15% market share in baby deliveries over the next five years.
  3. SOG aims to hire 2-3 like-minded doctors per year which includes at least one more O&G doctor in 2019.
  4. In response to a question about Dr Heng’s contributions to the group, the CFO said none of the doctors contributed more than 25% of total revenue to the group.
  5. Dr Heng was paid SGD1.25 million in 2018 which includes all medical, consultation and surgical fees.
  6. The dermatology segment has been hurt by a slowdown in medical tourism. SOG has hired a second dermatologist who specialises in skincare issues for young children.
  7. The pediatric segment is still in an early stage of gestation with the company’s first pediatric doctor completing her first anniversary. SOG is targeting for the segment to breakeven in the next 1-2 years. SOG is hiring pediatric doctors with a sub-specialty (eg. gastroenterology) to improve differentiation.
  8. A shareholder suggested bundled pediatric and O&G packages to improve inter-clinic synergy. Management is already considering such ideas.
  9. A shareholder highlighted that the service agreements for the three founding doctors (Dr Heng, Dr Lee and Dr Beh) will end on 31 December 2019 and requested for a more evenly distributed renewal profile in the future. The CEO, Dr Ivan seemed open to the idea and said the idea would be taken into consideration.
  10. SOG typically signs 5 year service agreements with doctors who join the group. Joining SOG allows the doctors to focus on healthcare while SOG will manage the administrative, finance and HR issues. Doctors are paid partly in SOG shares for alignment with shareholders. As part of a group, new doctors gain mentorship and learning opportunities. For example, SOG is the first company to launch HIFU (High Intensity Focused Ultrasound) treatments which is a non-surgical procedure for uterine fibroids and liver tumors.

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