SGX 5 Best-Yielding Healthcare Stocks Average 5% Indicative Dividend Yield

Singapore’s healthcare sector, typically viewed as a defensive segment and poised to enjoy multi-year growth prospects, has benefited from rotational fund flows recently, as investors took refuge in haven assets following a rise in risk-aversion.
The iEdge SG All Healthcare Index is a free-float, market capitalisation-weighted index that comprises 31 constituents and measures the performance of Singapore’s listed healthcare sector.
The five best-yielding constituents of the iEdge SG All Healthcare Index are: First REIT (6.9%), ISEC Healthcare (4.9%), Singapore O&G (4.9%), Parkway Life REIT (4.8%), and Talkmed Group (3.4%). These five stocks have averaged a dividend indicated yield of 5.0%, vs the STI’s 12M trailing yield of 4.5%.

The iEdge SG All Healthcare Index is a free-float, market capitalisation-weighted index – comprising 31 constituents – that measures the performance of Singapore’s listed healthcare sector.

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 recently 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.

The five best-yielding constituents of the iEdge SG All Healthcare Index are: First REIT (6.9%), ISEC Healthcare (4.9%), Singapore O&G (4.9%), Parkway Life REIT (4.8%), and Talkmed Group (3.4%). These five stocks have averaged a dividend indicated yield of 5.0%. In comparison, the benchmark Straits Times Index (STI) has a yield of 4.5% on a 12-month trailing basis.

Excluding the healthcare Real Estate Investment Trusts (REITs), the five best-yielding, non-REIT constituents are: ISEC Healthcare (4.9%), Singapore O&G (4.9%), Talkmed Group (3.4%), Tianjin Zhongxin Pharmaceutical (3.3%), and HC Surgical Specialists (3.2%).

The table below details the 10 best-yielding constituents of the iEdge SG All Healthcare Index, sorted by dividend yield. Click to view the stock profiles in StockFacts.

Source: Bloomberg & StockFacts (data as of 17 Sept 2018);

Note: Tianjin Zhongxin is traded in USD, with SGD values shown here.

Recent Earnings Highlights of 3 Best-Yielding Healthcare Plays

First REIT Banks on Indonesia’s Bright Outlook

For the second quarter ended 30 June 2018, First REIT reported a 0.5% YoY rise in distribution per unit (DPU) to 2.15 Singapore cents. Gross revenue rose 5.3% to S$28.9 million, while net property income increased 5.0% to S$28.5 million.

The trust noted that with the recent weakening of the Indonesian rupiah, the country’s central bank has raised domestic interest rates to support its currency, but this has no impact on the its borrowings because its loans are originated in Singapore and denominated in Singapore dollars.

Meanwhile, the outlook for healthcare spending in Indonesia remains bright. According to BMI Research, healthcare spending in the country amounted to Rp403.9 trillion in 2017, and is projected to rise to Rp1,224 trillion by 2027. Per capita healthcare spending will also more than double between 2017 and 2027. Against this trend, together with the growing nationwide adoption of the national health insurance scheme, private healthcare demand will continue to rise. As a result, First REIT remains well-positioned for further growth, with a strong acquisition pipeline of around 40 hospitals in Indonesia from its sponsor, PT Lippo Karawaci Tbk, the trust noted in its results statement.

Click here for the full results statement.

Note: OUE Lippo Healthcare said in a statement on Tuesday it has agreed to buy 10.6% of First REIT for about S$103 million from PT Lippo Karawaci, and plans to fund the acquisition via a S$150 million rights issue.

ISEC Healthcare Eyes Regional Opportunities

For the second quarter ended 30 June 2018, ISEC Healthcare reported a 16% YoY increase in net profit to S$2.27 million, while revenue gained 13% to S$10.4 million.

The Group said it continues to seek suitable opportunities to penetrate markets in China, Indonesia, Myanmar and Vietnam, while strengthening its existing presence in the core markets of Singapore and Malaysia. It will also continue to pursue investment opportunities which are in line with the Group’s business strategies as and when they arise.

Age-related eye diseases and conditions apparent in ageing populations, rising income levels, as well as increasing private insurance coverage will boost patients’ propensity in seeking timely and private medical treatment.

With these trends in mind, the Group remains positive regarding prospects in the healthcare industry in Singapore and the region, despite challenges and stiff competition in the industry, it added in its results statement.

Click here for the full results statement.

Singapore O&G Sees Consistent Performance Ahead

For the second quarter ended 30 June 2018, Singapore O&G reported a 75.3% YoY jump in net profit to S$3.75 million, while revenue gained 19% to S$8.64 million, driven by its O&G, cancer-related and paediatrics divisions.

Based on its strong 1H performance, the company has declared an interim one-tier, tax-exempt dividend of 0.80 Singapore cents per share.

Looking ahead, the Group noted that it was unaware of any significant change in trends and competitive conditions that will significantly affect its operations and businesses – the Singapore Government has not changed its policy on or actions in encouraging population growth nor has there been any macro health risks that could severely affect private healthcare visitations.

Barring unforeseen circumstances, the Group said it expects to remain profitable in the next reporting period and the next 12 months.

Click here for the full results statement.

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