Here at Light Asset, our focus is on realising the human potential by investing in businesses that truly add value to society.
Healthcare Comforter is showing the exact signs of Uniqlo (Fast Retailing) before their overseas sales grew ten times in 10 years, significantly propelling the company up 70% while major indices consolidated 50% in the Great Financial Crisis.
Megatrends in Asia Pacific such as 1) aging population, 2) rising middle class, 3) increased public healthcare programs like Modicare in India, and 4) increasingly severe shortage of healthcare labour has resulted in 5) the increased adoption of robotics and automation such as Healthcare Comforter’s products.
To ride along these long tailwinds, Healthcare Comforter has quickly switched from their previous model of Business-2-Business to Direct-to-Consumers, silently tweaking from a one-off sell-and-be-done process to a recurring subscription base backed by servicing and maintenance. Because of this change, their business is no longer constrained by the speed of healthcare infrastructure being built and are now open to the full and increasing demand of their products and services.
To put things into perspective, one company that successfully transformed in this manner in the past decade is Microsoft, which recently retook the position as the Most Valuable Company in the World. Ever since Satya Nadella took the helm, Microsoft changed from selling one-off Office licenses to yearly subscriptions, and from completing big and one-off corporate server projects to recurring cloud-based server services. Investors gladly pay up a premium valuation for their recurring business model compared to the previous lumpy one even if the former entails smaller price points than the latter, because such a recurring model allows Microsoft’s business to grow steadily against crises when sales order might dry up.
Meanwhile, because of how silently Healthcare Comforter has been tweaking their business, they continue to be overlooked by investors; and while market participants might not realise these significant changes yet, we are happy to co-own this business for a long time.