What investors need to know about Singapore O&G's IPO

It's targeting a high dividend payout.

Obstetrics and gynecology firm Singapore O&G (SOG) last week revealed its plans for an IPO.

According to KGI Fraser, SOG enjoys certain competitive strengths and has a high-margin cash generative business.

Among its strengths are its well‐established specialist medical practitioners in women’s healthcare, its dedicated management team with relevant industry experience, its disciplines and focused direction, and its conveniently‐located clinics in the Central and East regions of Singapore.

The company also plans to offer additional specialist services where priority is made for infertility and in-vitro fertilisation (IVF) services, as well as expand its business operations locally and regionally through organic growth, joint ventures and acquisitions.

The group targets to distribute dividends of up to 90.0% of net profit after tax for FY2015. It will continue to be majority owned by the O&G doctors post‐IPO.

“At S$0.25, SOG is priced at 12.8x P/E based on 2014 EPS (post‐ invitational share capital of 218m shares). Other medical specialist peers that went for IPO in 2014, such as TalkMed Group (Oncology) and ISEC Healthcare (Ophthalmology) are trading at FY15F consensus P/E of 18.1x and 35.8x, respectively,” stated KGI Fraser.