Healthcare Sector Review 2018

Date: 04 December 2018

Summing up the year, we will be doing a series of 4 industry reviews to share across the performances of local market in 2018.

To kick start, we will be looking into the Healthcare industry, one of the strongest sectors in Singapore. While this sector is typically known to be a defensive segment, the landscape of demands and lagged supply of equipment and services in South East Asia provide a significant growth outlook.

At the start of 2018, Frost and Sullivan projected an 11.1% growth for the healthcare industry in Asia Pacific. They cited the growth to be fueled by increased adopting of technology, innovative healthcare access programs and delivery of care outside traditional hospital settings.

Under ShareInvestor’s platform, there are a total of 10 healthcare stocks under the category of Medical & Biotechnology, Hospital/Nursing Management.

  • Q&M Dental (QC7.SI)
  • IHH (Q0F.SI)
  • Raffles Medical (BSL.SI)
  • TalkMed (5G3.SI)
  • HMI (588.SI)
  • OUE Lippo HC (5WA.SI)
  • SingMedical (5OT.SI)
  • Singapore O&G (1D8.SI)
  • Healthway Med (5NG.SI)
  • ISEC (40T.SI)

Intrinsic Value

Based on Discount Earnings Model, 2 counters spring up to be undervalued stocks, primarily Q&M Dental and ISEC.

Further insights to the 2 mentioned counters:

Q&M Dental

Listed in 2009, it has grown from strength to strength and now has more than 30 clinics island wide and one mobile dental clinic, thus, making it the largest private dental healthcare group in Singapore.

Below is the financial analysis of Q&M Dental based on their latest reporting:

While the company is performing good in most of their financial, an alert was raised for its debt to cashflow ratio, which is at 61% and this is contributed primarily by its high borrowings.

Shares of Q&M Dental Group traded at S$0.495 (as of 30 Nov, 12pm), which translates to a price-to-earnings ratio of 25.13 and an annualised shareholder return of 14.74.

ISEC Healthcare Ltd

Listed in 2014, the group currently provides medical eye care services at four locations that are equipped with state-of-the-art technology and facilities across Malaysia and Singapore.

Below is the financial analysis of ISEC based on their latest reporting:

Considered as one of the younger healthcare stocks in Singapore, their revenue has increased by a compounded annual rate of 13.9% and its prospect is bright with strong growth projected in both its top-line and bottom line due to higher number of visits at existing eye centres.

Among its local peers, it is currently the highest in dividend yield at 4.44%.

Shares of ISEC Healthcare Ltd. traded at S$0.270 (as of 30 Nov, 12pm), which translates to a price-to-earnings ratio of 17.05 and an annualised shareholder return of 5.8.

Dividend Investing

As mentioned, ISEC is the top of healthcare for dividend play.

Singapore O&G comes in 2nd place with a yield at 4.21% and its dividend represents a 61% payout ratio.

TalkMed is 3rd in place with a yield of 3.55%.

Overall Performance

Based on current price, 2 stocks are spotted to be trading close to their 52 weeks low – ISEC and OUE Lippo.

In terms of returns based on 1-year timeframe, Raffles Medical is the only positive at 8.41%. If we expand the period to a 5 year horizon, HMI and Sing Medical produce a return of 297.81% and 249.56% respectively.

Lastly, leaving you with some financial ratios across the 10 counters.

To gain more insights of stocks using ShareInvestor’s webpro, please visit http://www.shareinvestor.com/sg

Happy investing!

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