ECON Healthcare sells its Crosstec shares after around 85 percent plummet

Sculpture by Jimmie Durham, titled ‘Still Life with Spirit and Xitle,’ made of car, volcanic stone and acrylic paint at the Hirshorn museum in Washington, DC. Photo taken July 2018.Sculpture by Jimmie Durham, titled ‘Still Life with Spirit and Xitle,’ made of car, volcanic stone and acrylic paint at the Hirshorn museum in Washington, DC.

ECON Healthcare (Asia) has sold its 11.8 million shares of Crosstec Group after the value plunged around 85 percent, a loss considered “material” at more than half of fiscal 2021’s net profit, the nursing home operator said in a filing to SGX Thursday. 

The liquidation of the shares of Crosstec, a Hong Kong-listed interior design player, came not long after the shares were acquired. 

On 30 December, the company acquired 6.8 million Crosstec shares for around S$1.99 million, and on 6 January, the company acquired another 5 million shares for around S$2.0 million, for a total investment of around S$3.99 million, ECON Healthcare has previously said.

On 12 January, ECON Healthcare sold the shares for an estimated loss of around S$3.4 million, the company said Thursday. 

Shares of Crosstec plunged from as high as HK$2.65, touched on Monday, to close at HK$0.193 on Thursday. Crosstec told HKEx it wasn’t aware of any reason for the plunge.

ECON Healthcare said the loss represented around 13.8 percent of its net tangible assets, based on its latest audited financial statement as of end-March 2021, and was around 4.7 percent of its market capitalisation of around S$72 million as of Wednesday. The filing said net profit for the 12 months ended 31 March 2021 was S$5.7 million. 

The Singapore-listed nursing home operator said it had been seeking to improve the yield on its idle cash. 

Ong Chu Poh, founder, executive chairman and group CEO of ECON Healthcare, said the decision to liquidate the Crosstec shares would allow the group to focus on its core business. 

“This has no operational impact on our business, which continues to deliver strong operational performance with a 6 percent year-on-year topline growth for the six-month ended 30 September 2021,” Ong said in the statement. “The group remains committed to taking care of the needs of the rapidly ageing population in Asia. We will continue to grow our portfolio of services to cater to these needs.”

The investment was funded with a working capital surplus, and didn’t include any initial public offering (IPO) proceeds, ECON Healthcare said, adding the loss won’t have a material impact on working capital, cash flow and operations.

ECON Healthcare operates 11 medicare centers and nursing homes in Singapore, Malaysia and China.

In January 2020, the company was appointed an operator for two new nursing homes, the ECON Medicare Centre and Nursing Home – Henderson, expected to be operational in the second half of this year, and the ECON Medicare Centre and Nursing Home – Jurong East, which is expected to be operational in 2025, according to the company’s website.