Regarding TMC Life Sciences

The company was losing money and because of the detailed presentation from TMC's management, OSK is sticking to its forecast of a net profit of rm 5.8 million from TMC.

• Management gave a detailed presentation on TMC’s traditional fertility business and the new Tropicana Medical Center. Key highlight was that the new medical centre is expected to turn around this year. We are maintaining our RM5.8m net profit forecast for FY10.

Have a look.

Isn't this the key issue. Company expects to see an earnings turnaround.

On the Edge financial daily, it carried an article based on this report.

OSK Research Neutral on TMC Life Sciences at 34 sen

Now I saw and I glanced thru OSK's report before I came upon the Edge article and straight away, I said to myself, 'yeah right, the neutral is based on TMC's ability to swing from losses to profits this year'. Not sure that it deserves the neutral rating.

Anyway, I decided to read the article on the Edge.

• KUALA LUMPUR: OSK Research is maintaining its Neutral call on TMC Life Sciences at 34 sen and maintains the RM5.8 million net profit forecast for FY10.
  
  In terms of recommendation, the research house said on Wednesday, March 24 it was still Neutral on the stock because of its unattractive FY10 PER.
  
  “Management reiterates that TMC will continue to pay dividends despite the Tropicana Medical Centre is going through a gestation period,” it said.
  
  OSK Research said the management gave a detailed presentation on TMC’s traditional fertility business and the new Tropicana Medical Center. Key highlight was that the new medical centre is expected to turn around this year.
  
  All the key operating statistics of the Tropicana Medical Centre such as number of admissions, average revenue / in-patient, number of new beds opened and number of in-patients have improved over the last three quarters. As a result, TMC had recorded positive EBITDA and reduced net losses.
  
  The research house said TMC had undertaken various initiatives to create greater awareness for the new hospital. Majority of its clientele thus far came from the surrounding communities and the company will continue to promote its services.
  
  In FY09, TMC derived 59% of its revenue from fertility services and another 29% from hospital services. Two other services namely the wellness program and the stem cell which contributed 9% and 3% respectively to FY09 revenue are expected to remain relatively stable in FY10.
  
  For the wellness program, marketing agency which has committed to bring in RM42 million sales over the 5 years period would provide stable revenue to TMC though not very significant.
  
  As for the stem cell business, because of pricing competition and limited stem cell therapies, OSK Research says it is not expecting this division to contribute significantly to TMC at least for the next two years.

I was left wondering. Why the Edge article misses out the biggest point made by OSK? As it is, TMC is a company losing money and despite OSK expecting a turnaround - from losses to a net profit of 5.8 million, it only rates it neutral.

And for the record, TMC lost a huge 8.5 million for fiscal year 2009. See earnings reported last month: Quarterly rpt on consolidated results for the financial period ended 31/12/2009