Singapore’s Healthcare Sector is aptly represented by the iEdge SG All Healthcare Index which has generated an 81% total return in the 2020 year to 17 August, predominately driven by Top Glove Corp Bhd, Riverstone Holdings and Medtecs International Corp.
Since the STI high on 9 June, iEdge SG All Healthcare Index has generated a 34% total return. Constituents that saw a significant pick up in trading activity over those nine weeks included the Vicplas International, QT Vascular, Hyphens Pharma International, Top Glove Corp Bhd and UG Healthcare.
There have also been multiple outlier and performance skews for the top quartile of global health stocks by market value, with 128% average total returns and 23% median total returns. Life science, medical devices and medical supplies have been the strongest segments of the global sector.
The combined market value of globally-listed healthcare stocks has increased 17% in the 2020 year-to-date to S$13.7 trillion.
Top Glove Corp Bhd (”Top Glove”) has moved from being outside the top 120 Asia Pacific Healthcare stocks by market value to within the top 40, in addition to now ranking as ASEAN’s biggest healthcare stock by market value. Top Glove is expected to release its FY20 (ending 31 August) results by the end of September, after reporting the Group's 9MFY20 Sales Revenue was RM 4.1 billion, a 14% y-o-y increase, while Profit After Tax was RM 577.8 million, a 97% y-o-y increase, which had also exceeded the net profits for the full financial year 2019 by 57%. In addition to being ASEAN’s biggest healthcare stock and the largest constituent of the iEdge SG All Healthcare Index, Top Glove also emerged its position as the world’s largest manufacturer of nitrile gloves, in addition to being the world’s largest manufacturer of natural rubber gloves and surgical gloves.
From the end of 2019, thorough to the major market lows of 23 March, the iEdge SG All Healthcare Index had also declined 19.2%, however has since rebounded to generate a 2020 year to 17 August total return of 81.3%.
As illustrated below, the iEdge SG All Healthcare Index has also continued to generate gains, since the STI’s post-23 March high on 9 June. The iEdge SG All Healthcare Index has declined 6.4% since forming is record high of close of 2,617 on 7 August.
The iEdge SG All Healthcare Index is currently trading at a P/E ratio of 51.6x (up from 24.4x at end of 2019), which compares to the median P/E of the top quartile of global healthcare stocks at 40.8x (up from 30.8x at end of 2019). Meanwhile the simple average but skewed P/E of the top quartile of global healthcare stocks has increased from 58.0x to 90.8x. Similarly, the top quartile of global health stocks by market value have seen a skew in 2020 to 17 August performances, with 128% average total returns and 23% median total returns. Life science, medical devices and medical supplies have been the strongest segments of the global Sector.
Over the course of 2020, the iEdge SG All Healthcare Index has seen both Riverstone Holdings and Medtecs International Corporation rise to the top three heavyweights of the Index.
Riverstone Holdings was previously the ninth biggest weight at the end of 2020 and Medtecs International Corporation (“Medtecs”) was previously the outside the twenty largest Index weights. Together, Top Glove, Riverstone Holdings and Medtecs now make up more than half the entire Index weight. Riverstone Holdings posted a 119.3% y-o-y increase in 1HFY20 net profit to RM137.5 million driven by the surge in demand for its products worldwide (for more click here).
The next rebalance date for the iEdge SG All Healthcare index is on 28 Sep 2020, based on data retrieved on review date 31 August 2020. This means that effective 28 September any constituents with an Index weight above 10% will see their weightings moved back to 10%. This process also took place at the last rebalance which was effective the open of 23 March, however Top Glove’s outperformance of the day of 23 March saw the stock end the day with a 13.9% weightage.
As illustrated above, Top Glove has seen its weightage in the Index increase from 13.9% at the time of the major market lows on 23 March to 23.8% on 9 June which was the date of the post-23 March STI high. Its weighting reached as high as 28.5% on 27 July and has since consolidated back to 23.5% as of 17 August.
Another stock that has entered the 10 biggest weights of the Index as of 17 August 2020 is Vicplas International which operates both a Medical Devices segment and a Pipes and pipe fittings segment. The company reported back in March that 1HFY20 (ending 31 Jan) revenue for the medical devices segment was $29.8 million, an increase of 67.9% from 1HFY19 due to increased orders from its customers while its segment result improved to $2.9 million in 1H FY20 from negative $0.1 million in 1HFY19.
Medtecs has led the performances of the 10 biggest weights of the iEdge SG All Healthcare Index in the 2020 year to 17 August. On 11 August, Medtecs reported 1HFY20 (ending 30 June) Group revenue increased significantly by 390.5% from US$33.2 million in 1HFY19 to US$162.6 million in 1HFY20 from increased demand for personal protective apparels due to the COVID-19 global pandemic; which also raised awareness on healthcare products and led to increase in sales from its existing customers. The Group’s net profit after tax increased from US$386,000 in 1HFY19 to US$38.9 million in 1HFY20 due to higher sales, higher profit margins and foreign exchange gains. For more click here.
|Current Top 10 Index Weights||SGX
31 Dec 19
- 23 Mar 20
23 Mar 20
- 9 Jun 20
9 Jun 20
- 17 Aug 20
|TOP GLOVE CORP BHD||BVA||28.8||183.6||32.1||71.7||379.5|
|MEDTECS INTERNATIONAL CORP||546||83.8||245.6||589.4||165.4||4278.4|
|PARKWAYLIFE REAL ESTATE||C2PU||-16.4||28.2||2.4||28.8||6.6|
|IHH HEALTHCARE BHD||Q0F||-13.4||15.8||-4.3||28.5||-4.8|
|RAFFLES MEDICAL GROUP||BSL||-27.0||28.1||-9.7||27.2||-17.5|
|TIANJIN ZHONG XIN PHARM CO-S||T14||-35.0||49.4||10.9||36.7||2.3|
|FIRST REAL ESTATE INVT TRUST||AW9U||-41.0||24.5||-14.4||51.0||-40.2|
|Q & M DENTAL GROUP SINGAPORE||QC7||-24.0||33.4||0.0||39.9||-3.1|
The next 5 largest weights of the iEdge SG All Healthcare Index are currently Thomson Medical Group, UG Healthcare, TalkMed Group, Singapore Medical Group and IX Biopharma. UG Healthcare’s share price has moved from 14 cents at the end of 2019 to S$2.63 as of 17 August. On 11 August, UG Healthcare Corp reported record revenue and net profit for FY20 (ending 30 June) with plans to expand production capacity by 59% by the end of FY21 (click here for more).
Since the STI high on 9 June, iEdge SG All Healthcare Index has generated a 34% total return. Constituents that saw a significant pick up in trading activity over those nine weeks included the Vicplas International, QT Vascular, Hyphens Pharma International, Top Glove and UG Healthcare.
Together the constituents of the iEdge SG All Healthcare Index have seen S$55.5 million in average daily turnover in the 2020 year to 17 August.