Shares in OUE Healthcare 5WA 0.00% opened at 3.5 cents apiece on May 16, 34.6% higher than the group&rsquo s last-closed price of 2.6 cents on May 15.

 

The surge came after OUE Healthcare announced that its joint venture (JV) opened its first hospital in Changshu, China, named Changshu Hospital.

 

Operated by OUE Healthcare&rsquo s JV company, China Merchants Lippo Hospital Management (Shenzhen) Limited, the 100-bed obstetrics and gynaecology (O& G) hospital is the first such hospital to be commissioned in the Chinese city. The hospital will be providing premium obstetrics, gynaecology, paediatrics and other related medical services to patients in Changshu, Suzhou, and the Yangtze River Delta region.

 

In addition, the hospital, which has a total gross floor area (GFA) of 23,000 sqm, has a 27-suite confinement centre that provides postpartum rehabilitative services. The hospital also has other ancillary medical services such as medical aesthetics.

 

China Merchants Lippo Hospital Management (Shenzhen) is the group&rsquo s 50:50 joint venture company with a subsidiary of China Merchants Shekou Industrial Zone Holdings (CMSK).

 

CMSK, in turn, is a member company of the state-owned Hong Kong-based conglomerate, China Merchants Group.

&ldquo I am glad our first JV hospital with China Merchants Group in China is located in Changshu, Suzhou - one of the most economically vibrant and pro-business locations in China. We hope to bring in best-in-class hospital care and services to meet the rising expectation of Chinese consumers based on international standards and Singapore&rsquo s clinical and care experience,&rdquo says Lee Yi Shyan, chairman of OUE Healthcare.

 

&ldquo We are excited with the opening of Changshu Hospital, which is an important milestone in our journey to build a regional healthcare ecosystem anchored on international medical quality and excellence. We believe that our holistic value proposition in providing a full spectrum of care services will meet the personalised needs of our patients and will set us apart from our peers,&rdquo adds Yet Kum Meng, CEO of OUE Healthcare.

 

Changshu is a county-level city under Suzhou in the Jiangsu province. According to OUE Healthcare, the city has achieved &ldquo steady economic growth&rdquo with its GDP for 2022 growing by 2.0% y-o-y to a record RMB277.4 billion ($53.29 billion), putting it among the top five prosperous cities in China.

 

CATALIST-LISTED OUE Lippo Healthcare : 5WA +3.13% (OUELH) on Friday (Aug 5) posted a 93 per cent drop in net profit to S$8.4 million for its half year ended Jun 30, 2022, from S$113.8 million a year earlier. Its revenue, however, was several times that of the previous years: S$42.6 million for H1 FY2022, versus S$9.7 million for H1 FY2021.

 

The company&rsquo s financial statement was laden with exceptional items, reflective of a restructuring and the shuffling of control of assets among related companies by the healthcare group&rsquo s parent OUE.

 

Most of the increase in OUELH&rsquo s revenue came from the consolidation of First Reit : AW9U 0%, a healthcare Reit within the OUE stable.

 

On Mar 1, OUELH had sold 2 subsidiaries to First Reit in exchange for units of First Reit. The deal took OUELH&rsquo s stake in First Reit from 15.3 per cent to 33.1 per cent. The change in ownership allows OUELH to consolidate First Reit&rsquo s revenue into its own.

 

The transaction was also accounted for as a disposal of an associate, and allowed OUELH to recognise a net gain of S$3.1 million.

 

On top of this, OUELH recognised a fair value gain of S$4.2 million on First Reit&rsquo s investment properties.

 

Both items were reported as other income in OUELH&rsquo s statements, and should have boosted the company&rsquo s profits. But OUELH had booked a far larger exceptional item in the year-ago period.

 

Its net profit of S$113.8 million for H1 FY2021 was boosted by a one-off S$110 million gain from a shareholder loan conversion.

 

On Mar 16, 2021, OUELH had converted a total of S$189.6 million in loans and accrued interest owing to its parent, OUE, into convertible perpetual securities. OUELH booked a one-off gain representing the difference between the principal amount and the fair value of the perps, of S$79.6 million.

 

Stripping out these transactions and exceptional items, OUELH&rsquo s healthcare operations reported revenue of S$2 million &mdash up from S$1.2 million. Segment losses widened, too, to S$1 million from S$892,000.