Beverly JCG, formerly JCG Investment Holdings, acquired 51% of the Beverly Wilshire Medical Centre Group of Companies (BW Entities) in Nov ember 2019. A well-known brand in Malaysia with multi-award-winning integrated beauty and wellness medical centres, it operates two Malaysian Ministry of Health licensed medical centres and six licensed clinics across Malaysia.
1. What are Beverly JCG ’s main business segments and revenue drivers?
The aesthetic medical and healthcare segment serves as the core focus of Beverly JCG. With two medical centres and six clinics across Kuala Lumpur, Johor Bahru and Ipoh in Malaysia, the group offers a comprehensive range of invasive and non-invasive treatments. Backed by a team of 24 professional doctors specialising in various fields, Beverly JCG provides cosmetic surgery procedures (like facelifts, eyelid surgery or blepharoplasty) and breast augmentation) and aesthetic medical treatments (like fat reduction, Botox injections and hair loss treatment).
Meanwhile, the trading and distribution segment represents the legacy business, and focuses on trading and distributing steel raw materials, consumables, instruments, and semi-finished products to steel mills, iron and steel foundries, and aluminium smelters in Asia-Pacific. The group also provides ancillary services to support clients’ specific requirements.
The primary revenue driver for Beverly JCG is the aesthetic medical and healthcare segment, which contributed 96% of the group’s FY2022 revenue. In FY2022, the aesthetic medical and healthcare segment generated revenue of $10.07 million, representing a 14% y-o-y increase. The trading and distribution segment generated revenue of $0.44 million, a notable 154% y-o-y increase.
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2. Describe Beverly JCG’s recent financial performance. What factors drove higher revenue and margin expansion?
The reopening of Malaysian borders in April 2022 significantly drove revenue growth for the group. The BW Entities historically derived a substantial portion of its total revenue (approximately 40%) from overseas clients. Since the reopening, there has been a notable 14.8% increase in revenue, primarily attributed to a surge in foreign clients seeking aesthetic treatments from Australia and New Zealand.
Beverly JCG expects contributions from overseas segments to grow as the travel industry resumes normalcy. Beverly JCG has experienced a progressive rise in its gross profit margin, increasing from 45% in FY2020 to 55% in FY2022. This can be attributed to increased sales and higher price points of aesthetic medical treatments. The CAGR for revenue and gross profit are 48.6% and 68.1% from FY2019 to FY2022, respectively.
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The newly incorporated entities under the Natasha Beverly brand have positively impacted Beverly JCG’s financial performance. The entities collectively generated total revenue of $1.3 million in FY2022, representing a significant 44% increase compared to the $0.9 million generated in FY2021. As organic growth entities, these brands are expected to continue driving higher revenue growth for the group in the next 12 months.
3. How has the group evolved since the rebranding in 2019?
Since its rebranding, the group has undergone significant developments and strategic transformations. However, it is important to note that the group’s evolution encompasses the period since its listing in 2006. Initially known as Albedo, the group underwent a series of name changes, including China Medical (International) Group in 2016, JCG Investments in 2018, and Beverly JCG in 2020.
The group has consistently recognised the aesthetic medical and healthcare business as a high-growth industry. The group moved significantly in 2019 by acquiring a 51% stake in the reputable and popular aesthetic medical and healthcare provider BW Entities. This acquisition aimed to leverage BW Entities’ positive cash flow from operations and industry expertise as an opportunity to turn the company around.
During this period, group CEO Ng Tian Sang stepped up to lead the company to enhance long-term shareholder value. With decades of business leadership, Ng spearheaded the efforts to align the group’s focus towards the aesthetic medical and healthcare industry.
4. How has the acquisition of the BW Entities impacted business operations and financial performance?
The group’s values and business aligned with those of BW Entities, presenting an opportunity to tap into the brand’s growth trajectory. Within the first two months of acquisition, the BW Entities recorded a revenue of $1.6 million for FY2019. Despite the challenges posed by Covid-19 from 2020 to 2022, BW Entities still drove significant revenue growth for the group. It generated a revenue of $5.4 million in FY2020, which grew to $10.5 million in FY2022, representing a CAGR of 39.4%. The group saw improved gross profit margins, from 37% in FY 019 to 55% in FY2022. These positive performances were achieved during the peak of the pandemic.
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5. How has Covid-19 affected business, and what measures were implemented to mitigate its effects?
The pandemic has significantly impacted operations, primarily due to the decrease in overseas clients due to border lockdowns and restrictions. A thorough assessment of its liquidity position was conducted, and strategic measures were implemented. One of the key measures involved adjusting prices for products and services to adapt to the changing market conditions.
Beverly JCG recognised the financial challenges during the pandemic and introduced affordable medical and aesthetic packages to cater to their evolving needs while sustaining the business. The group remained committed to its strategic plan for growth through M&A and organic expansion, ensuring continued growth and resilience despite challenging circumstances.
6. What are some of the key considerations when expanding into a new market or business vertical?
When expanding, Beverly JCG focuses on key considerations such as leveraging the expertise of professional doctors with established records and a strong customer base. This strategic approach helps to enhance the brand presence and attracts a diverse range of patients. Beverly JCG conducts thorough market research to gain insights into local dynamics and consumer preferences, allowing for tailored offerings. By understanding the unique characteristics and demands, Beverly JCG can effectively position itself and capitalise on emerging opportunities.
7. What new markets are the firm looking to expand into, and why?
Beverly JCG is actively exploring opportunities to expand into Singapore’s dentistry market through the potential acquisition of new dentists and mergers. The focus is on partnering with established dentistry chains that have demonstrated profitability and can generate healthy cash flow from operations. By pursuing these mergers, Beverly JCG aims to leverage the strengths and synergies of these established aesthetic medical and healthcare chains to enhance its business offerings. This strategic expansion will complement its existing operations and strengthen its position in Malaysia while expanding into the Singapore market. It will also enable Beverly JCG to tap into new customer segments and broaden its products and services portfolio.
8. What is the group’s M&A strategy, and what are some considerations when acquiring new subsidiaries?
The group’s M&A strategy revolves around expanding its suite of services through mergers with other large chain brands, focusing on the cosmetic dental industry. In addition, Beverly JCG aims to enhance its regional presence in Singapore by merging with existing brands.
These mergers will likely involve share swaps and issuance between companies, reducing the need for significant cash considerations.
The group has been discussing with various aesthetic medical and healthcare players to establish synergistic partnerships or mergers. When considering potential acquisitions, the group emphasises the target company’s reputation in terms of branding and the expertise of its attending doctors. The target company should also have a record of generating positive cash flow.
9. Describe the environmental, social and governance (ESG) factors that are material to Beverly JCG and how they will create long-term value for your stakeholders.
Two key ESG factors are anti-corruption and diversity and fair employment:
• Anti-corruption: Beverly JCG actively promotes ethical business conduct and prohibits bribery or corruption. The group has implemented comprehensive policies and procedures, including a whistleblowing system. Beverly JCG safeguards its integrity, protects stakeholder interests, and reduces legal and reputational risks by maintaining a zero-tolerance approach towards corruption. This contributes to the long-term value of stakeholders by fostering a culture of trust, transparency, and responsible business practices.
• Diversity and fair employment: The group recognises the importance of diverse perspectives and believes in providing equal opportunities for all employees. It actively promotes fair treatment, equal opportunities, and non-discrimination within its workforce.
Beverly JCG also aims to maintain a diverse board composition and believes it to be a means to enhance overall performance and decision-making processes. By valuing and fostering diversity, the company creates an inclusive work environment that attracts and retains top talent, encourages innovation, and better serves the needs of its diverse customer base.
10. Why should investors take a closer look at Beverly JCG?
Despite the challenges brought about by the pandemic, Beverly JCG has successfully recovered to its pre-pandemic levels. The BW Entities have also swiftly shifted into recovery mode and overcame challenges associated with declined revenue from foreign clients.
Having regained stability in 2022, Beverly JCG has set its long-term strategic plans to provide sustainable value to its stakeholders in the aesthetic medical and healthcare business. The group focuses on organic and inorganic growth, aiming to expand its products and services and enter the Singapore market.
Under the leadership of Ng as the group CEO, Beverly JCG is executing a series of corporate actions to enhance its performance. These initiatives include implementing cost management strategies, debt restructuring, and M&A activities. By expanding its products and services offerings and entering new markets like Singapore, the group aims to accelerate growth and strengthen its market position.
Candace Li is a research analyst with the Singapore Exchange S68
