Capital Trust Research - E-Channelling PLC

Company Snapshot
E‐Channelling PLC (ECL) is a pioneer software development and ICT service provider to the Healthcare industry in Sri Lanka. It is the first company in Sri Lanka to offer a complete ecommerce based service and the first public quoted Technology Company in the Colombo Stock Exchange. Today ECL is among the top 100 brands in Sri Lanka.

ECL was established in 2001 by several angel investors led by Millennium IT, another pioneer ICT company in Sri Lanka, known worldwide for advanced investment trading systems. In 2001, when the World Wide Web was gaining momentum, ECL envisioned an enabling service to eliminate the hassle and the inconvenience faced by the general public to obtain an appointment to meet a Specialist or Consultant at the time and place convenient to them. At the time when ECL was launched, other nations in the region and even UK and USA, did not have service to tie up Doctors, Patients and Hospitals, leveraging the power of the Internet and ecommerce.

ECL is now backed by a few strategic investors. The single largest shareholder is British American Technologies (Pvt) Ltd, which has a number of diversified holdings including a few listed companies in the Colombo Stock Exchange.

Case for Investment
* FY2012/13 is to report a phenomenal growth in revenue and profits due to;

- Upward revision in pricing (108%) while maintaining volume growth due to the inelastic demand

- Membership and annual fee charged from the newly introduced ECL Loyalty Card

- Organic growth in out‐patients for private hospitals which grew by 17% in FY11/12

* Earnings of FY2013/14 and beyond is forecasted to grow at a CAGR of 20% due to the organic and inorganic growth in the customer base which is forecasted to grow at a 7.5% CAGR in the next five years (which is conservative when compared to the 26.5% growth in FY11), and new ECL services that will be available from 2013.

* ECL is uniquely positioned enjoying a monopoly over its services, and it is noteworthy that almost all private hospitals demand for EChannelling Services as it has become a value addition to their business.

* The anticipated demographic shift will result in the elderly population which is at present 12.5% of the country’s population to rise up to 25% by 2041. Thus the demand for healthcare services is on an up trend and the footfall at private hospitals will grow along with the increase in per capita income. Hence we anticipate a sustainable earnings outlook for ECL.