Connect with us


7 Things You Need To Know About Niks Professional’s IPO – A Defensive Healthcare Provider

Niks Professional will start trading on 27 October 2023.

Niks Professional IPO

This article was contributed to us by James Yeo, from Small Cap Asia.

Niks Professional Ltd., an established family-practice dermatology and aesthetic medical services provider in Singapore, is going for a Catalist listing after lodging its preliminary offer document on Friday (Sep 29).

In this article, we will take a quick look at 7 key things you need to know about Niks Professional.

#1 Niks Professional Business Model

According to the prospectus, Niks Professional stated that it is a trusted and established family-practice dermatology and aesthetic medical services provider with an operating history of more than 25 years that also offers a comprehensive range of medical skincare products and salon services to complement medical solutions.

At the time of IPO, Niks Professional has 3 clinics and 3 outlets retailing Niks skincare products and offering facial services in Singapore as illustrated in the map below:

Niks Professional locations

Over at the clinic, the doctors typically offer 2 types of services: family-practice dermatology services and aesthetic medical services:

  • Family-practice dermatology – common skin conditions treated are acne, acne scar treatment, hyperhidrosis and eczema, and they are treated through a combination of medication, skincare products and medical procedures.
  • Aesthetic medical services – provide non-invasive and minimally invasive aesthetic medical services, including intense pulsed light treatment, lasers and injectable treatments like Botox, and Rejuran for anti-aging and contouring of the face and skin.

Niks clinics’ strength in family-practice dermatology sets them apart from “pure aesthetic clinics” which offer mostly medical cosmetic services like injections and aesthetic lasers. The Group believes that this renders their clinics’ revenues less vulnerable to economic downturns and disruptions.

Niks Professional Products

On top of that, the company operates an e-commerce platform selling Niks Professional skincare products to customers as well as supply them to some third-party medical clinics and beauty salons. As at the Latest Practical Date, the Group offers more than 100 unique proprietary medical skincare products under 5 broad categories for a more targeted approach to improve skin conditions namely:

  • body care, sun care and camouflage
  • dry and sensitive skin;
  • general skincare
  • oily, combination and acne-prone skin; and
  • pigmentation, photo-damage and anti-aging

Through its Shanghai subsidiary, NPSCL, Niks Professional distributes skincare products to 11 regional agents in the PRC, which in turn supply the products to hospitals, clinics, pharmacies, retail shops, doctors and consumers in their provinces and municipalities.

NPSCL also sells directly to some doctors and doctor groups, as well as to consumers via e-commerce through a WeChat mini-program and, a telemedicine platform in the PRC.

In short, Niks Professional can be considered as a one-stop solutions provider for a wide range of dermatological issues.

#2 Use of IPO Proceeds and Growth Plans

The net proceeds of S$3.3 million from the IPO will be used in the following ways:

  • Organic growth through opening of new clinics and outlets
  • Recruitment of healthcare and management professionals
  • Purchase of new equipment
  • Expansion of its medical skincare products distribution business in China
  • Expansion of business through acquisitions, JV and/or strategic alliances with parties whose businesses are synergistic or complementary with Niks business.

For the 1st point, Niks has revealed that it plans to set up 1 clinic in the North and 1 outlet in the West of Singapore.

As for its business in China, Niks plans to engage with doctors and end-users for direct sales of its products as this commands better margins than relying on its agents. This includes recruitment of staff with marketing expertise in China.

#3 Niks Professional Financial Performance

Niks Professional Net Profit

Despite operating under a challenging COVID-19 environment, Niks Professional was able to generate revenue consistently above S$11.0 million from FY2020 to FY2022.

Adding back the one-off listing expenses, we can also see that the adjusted net profits after tax is maintained at above S$3 million, in line with its stable revenue trend.

Niks Professional assets

In addition, the Group boasts of a strong balance sheet as it is a net-cash company with no borrowings at all. On top of that, it owns 3 leasehold properties with a book value of S$9.4 million under its ‘Property, plant and equipment’ segment.

The properties are AMK Shophouse, Bedok Shophouse and Vision Exchange Property, with a total area of 4,079 sq ft, and used primarily for retail and salon or medical clinic operations.

 Niks Professional cash flow

Last but not least, we can see that Niks Professional possesses a cash-generative business model with minimal capital expenditure as seen from their ‘net cash from investing activities’ in the past 3 years.

#4 Niks Professional is a Tight-Knit, Family-Run Medical Group

Founded in 1998 by a husband-and-wife team, the company has 3 clinics across Singapore: in Orchard, Jurong East and Tampines. Its 5 doctors offer medical consultation and services such as light and laser procedures, injectables and mole removals.

The company is led by co-founder Cheng Shoong Tat, who holds the chairman and chief executive officer positions. His wife, Dr Ong Fung Chin, started her own clinic in 1994 and serves as Niks Professional’s president and chief medical officer.

Mr. Cheng and Dr. Ong are Niks Professional’s main shareholders and shall remain as its directors.

#5 Why Should Investors Be Interested In Niks Professional IPO?

While there are many healthcare stocks listed on SGX like Raffles Medical or Q&M Dental, there is none dedicated to skincare/dermatology.

In fact, Niks Professional stands out from the rest due to its strong brand reputation – it offers more than 100 unique proprietary medical skincare products under the “Niks” brand. These products are also formulated by its own doctors for a more targeted approach to improve patient skin conditions.

On top of that, all the doctors in the company are general practitioners with qualifications or experience in dermatology, with an average of two decades of experience.

Last but not least, the Group has established a strong foothold in 2 markets –

  • Singapore, where it has evolved from a single-family clinic to 3 clinics and 3 outlets now together with a range of more than 100 skincare products; and
  • China, where it has built up a network of 11 regional sales agents, selling to healthcare facilities, doctors and consumers in 13 provinces and 1 city

With this firm foundation, Niks Professional is now ready to fuel the next phase of its growth through the IPO funds.

#6 Niks Professional IPO Details

A total of 21.8 million shares will be offered at $0.23 each. Only 1.0 million, or about 4.5% of the shares will be for retail investors, while the remaining is set aside for placement shares.

For those interested to invest in Niks Professional’s IPO, you can invest via the following methods:

  • ATMs and internet banking websites of UOB, DBS and OCBC
  • Mobile banking interfaces of UOB and DBS
  • Online portals of iFast Financial Pte Ltd
  • The “printed WHITE Public Offer Application Form”

Applications for this IPO will be open on 18 October, and will close on 25 October (Wednesday) at 12 noon.

Opening Date and Time 18 October 2023 at 6 p.m.
Closing Date and Time 25 October 2023 at 12 noon
Commence trading 27 October 2023 at 9 a.m.

#7 Niks Professional IPO Valuation and Dividend Policy

Niks Professional dividends

Taking the IPO price of S$0.23 and Adjusted EPS of S$0.0242, the P/E ratio comes up to a pretty cheap 9.5x if you were to compare to other listed medical stocks.

While Niks Professional revealed that it does not adopt a formal dividend policy, it plans to recommend not less than 50% in net profits in 2023 and not less than 40% in net profits in 2024 in dividends to reward its shareholders.

Niks Professional Has A Diversified Business Model

In conclusion, Niks Professional’s diversified business model and expansion plans in Singapore and China presents a compelling investment opportunity for investors looking to tap on growing demand for skincare and dermatology services.