SGX 5 Best-Performing Healthcare Plays Avg 11% Total Return in 3Q18-To-Date

Singapore’s healthcare sector – typically viewed as defensive and poised to enjoy multi-year growth prospects – has benefited from rotational fund flows recently. This follows increased risk-aversion on the back of higher market volatility, rising US-China trade tensions and an emerging market currency crisis.
In the 2018 YTD, the SGX All Healthcare Index, which comprises 31 constituents, has generated a total return of +3.4%, compared with total returns of -4.9% and -4.8% for the benchmark STI and the broader FTSE All-Share Index respectively.
In 3Q18 to-date, the five best-performing constituents of the SGX All Healthcare Index were: Riverstone (+14.0%), Raffles Medical Group (+11.4%), Aoxin Q & M Dental (+9.8%), Camsing Healthcare (+9.5%), and ISEC Healthcare (+8.0%). These five healthcare plays have averaged a total return of +10.5% over the period.

The SGX All Healthcare Index is a free-float, market capitalisation-weighted index that measures the performance of Singapore’s listed healthcare sector.

In the 2018 year-to-date (as of 7 Sept 2018), the Index, which comprises 31 constituents, has generated a total return of +3.4%, compared with total returns of -4.9% and -4.8% for the benchmark Straits Times Index and the broader FTSE All-Share Index respectively.

Singapore’s healthcare sector is typically viewed as a defensive segment, poised to enjoy multi-year growth prospects. Drivers of Asia’s increased healthcare spending levels include accelerated ageing rates, the rise of lifestyle diseases like diabetes and hypertension, as well as growing disposable incomes. For previously published Market Updates on Singapore’s healthcare sector, click here and here.

The sector has benefited from rotational fund flows recently, following increased risk-aversion on the back of higher market volatility, rising US-China trade tensions and an emerging market currency crisis.

In 3Q18 to-date, the five best-performing constituents of the SGX All Healthcare Index were: Riverstone Holdings (+14.0%), Raffles Medical Group (+11.4%), Aoxin Q & M Dental (+9.8%), Camsing Healthcare (+9.5%), and ISEC Healthcare (+8.0%). These five healthcare plays averaged a total return of +10.5% in the quarter-to-date, bringing their 2018 YTD and three-year total returns to +7.8% and +50.4% respectively.

Among these five stocks, Raffles Medical Group and Riverstone Holdings have the highest weightings in the SGX All Healthcare Index at 9.85% and 4.46% respectively.

The table below details the 10 best-performing constituents of the SGX All Healthcare Index, sorted by 3Q18 to-date total returns.

Recent Earnings Highlights of Three Best-Performing Healthcare Plays

Riverstone Holdings

For the second quarter ended 30 June 2018, Riverstone’s net profit rose 23.9% YoY to RM33.6 million, while revenue gained 0.5% to RM214.2 million.

The company said that it remained in “growth mode” despite continued challenges in the macroeconomic environment, which included foreign exchange rate volatility and fluctuations in raw material prices. It continues to focus on improving operational efficiency, tightening cost controls and progressively introducing automation within its production processes. While increasing total production capacity, it is also intensifying efforts to boost order allocation from new and existing clients. Its customised solutions, which make its gloves viable in new contexts and markets, continue to gain traction with customers.

Click here for the full results statement.

For a Market Update on SGX’s trio of rubber glove makers published on 29 August 2018, click here.

Raffles Medical Group

For the second quarter ended 30 June 2018, Raffles Medical Group reported a 3.6% YoY rise in net profit to S$16.8 million, while revenue gained 0.1% to S$120.2 million.

The Group noted that with the launch of its five-year partnership with the Ministry of Health (MOH) and the Agency for Integrated Care (AIC) in January 2018, quite a number of patients have been assisted to better manage their chronic conditions through the Raffles Medical Primary Care Network.

Meanwhile, the construction of Raffles Hospital Chongqing and Raffles Hospital Shanghai are progressing according to schedule, with the former slated to open in the fourth quarter of this year, and the latter in the second half of 2019.

CGS-CIMB Securities noted in a report published on 20 August 2018 that Raffles Medical Group will likely benefit from the building of more polyclinics, as well as new government initiatives that aim to cap healthcare costs for the elderly and lower-income earners through medical subsidies.

Click here for the full results statement.

Aoxin Q&M Dental Group

For the six months ended 30 June 2018, Aoxin reported a net profit attributable to shareholders (excluding one-off professional fees and expenses relating to its IPO) of RMB3.40 million. This compares with a net profit of RMB6.5 million for 1H2017. The lower 1H2018 net profit was due to initial start-up losses at its new Panjin hospital, and costs incurred on the training of dentists to support the Group’s long-term growth plans.

Revenue rose 18% YoY to RMB38.3 million for the period, driven by paediatric dentistry and implantology services, as well as its laboratory services business.

Looking ahead, Aoxin said it plans to open three to five dental centres for 2018, via organic expansion as well as acquisitions, to tap strong demand for premium dental services in China.

Click here for the full results statement.

To read the SGX kopi-C profile of Aoxin CEO Dr Shao Yongxin, click here.

This document is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Singapore Exchange Limited (“SGX”) to any registration or licensing requirement. This document is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document is for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Use of and/or reliance on this document is entirely at the reader’s own risk. Further information on this investment product may be obtained from www.sgx.com. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Examples provided are for illustrative purposes only. While each of SGX and its affiliates (collectively, the “SGX Group Companies”) have taken reasonable care to ensure the accuracy and completeness of the information provided, each of the SGX Group Companies disclaims any and all guarantees, representations and warranties, expressed or implied, in relation to this document and shall not be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind, including without limitation loss of profit, loss of reputation and loss of opportunity) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information, or arising from and/or in connection with this document. The information in this document may have been obtained via third party sources and which have not been independently verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties. The SGX Group Companies may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document is subject to change without notice. This document shall not be reproduced, republished, uploaded, linked, posted, transmitted, adapted, copied, translated, modified, edited or otherwise displayed or distributed in any manner without SGX’s prior written consent.

SGX Market Updates