The iEdge SG All Healthcare Index has generated a 30% total return in 3Q20, adding to its 37% total return in 1H20. Volatility of the Index continued to climb, with the 90 day annualised volatility of the Index increasing from 35% at the end of June to 45% as of 29 Sep.
Combined average daily turnover of iEdge SG All Healthcare Index constituents in 2020 increased to $66 million a day as of 29 Sep, from $36 million as of 30 June, on the back of comparatively wider price swings of medical suppliers attracting short-term investors with more risk-to-return tolerance.
For its FY20 (ending 31 Aug) Top Glove’s net profit increased 412% YoY. This coincided with a 12M 410% total return for the stock through to 17 Sep, the day its FY20 results were reported. Top Glove estimates glove demand will grow by 20% per annum in 2020, 25% in 2021 and 15% post-COVID-19.
Also on 17 Sep, the Employees Provident Fund Board of Malaysia become a substantial shareholder of Riverstone Holdings with the acquisition of 2 million shares increasing its direct interest in Riverstone Holdings from 4.86 per cent to 5.13 per cent.
Big Swings of Big Global Healthcare Stocks
The first half of 2020 saw sharp economic contractions across the world with lockdowns containing the spread of COVID-19 to 10 million people with a 4.9% mortality rate. The tally of COVID-19 infections has since more than tripled to 33 million cases, with effective treatments and more prevalent testing seeing the total mortality rate decline from 4.9% to 3.0%.
While the social and economic consequences of lockdowns to contain COVID-19 have been the major policy and market drivers in 2020, containment measures have directly impacted the demand for healthcare products. This has naturally impacted the business of listed providers of medical equipment and supplies. From the end of June through to 29 September, the top quartile of global healthcare stocks by market value generated a 3% median total return (with average total returns of 12%) on current median 90 day volatility of 48%.
This has brought the median total return of the top quartile of global healthcare stocks by market value to 20% and the average total return to 120%, the latter on skewed outlier performances of providers of medical equipment and supplies.
Continued Global Focus on Medical Supply Stocks Extends to Singapore
From the end of June through to 29 September, the iEdge SG All Healthcare Index generated a 29% price gain, adding to its 35% gain in the first half of 2020. This brought its 2020 year to 29 September price return to 74%. The 90-day volatility of the Index also continued to rise in the third quarter, moving from 35% at the end of June to 45% as of 29 September.
The big swings of the healthcare stocks that represent the sub-industries of medical supplies and equipment continued to attract active investors seeking shorter-term trading returns with increased risk. This saw the combined average daily turnover of the full constituents of the iEdge SG All Healthcare rise from S$36 million a day as of the end of June, to S$66 million a day as of 29 September. The combined average daily turnover of the constituents of the iEdge SG All Healthcare Index in 2019 was less than S$10 million a day.
Recent iEdge SG All Healthcare Index Rebalance Reveals Seven Index Heavyweights
The combined market capitalisation of the constituents of the iEdge SG All Healthcare Index is S$54 billion which represents 7% of the total market capitalisation of all stocks listed on Singapore Exchange at S$798 million. Business activities within the healthcare sector include, but are not limited to, healthcare providers, manufacturing and distribution of medical equipment and supplies, pharmaceutical companies, biotechnology companies or healthcare asset owners.
The most recent rebalance of the iEdge SG All Healthcare index took place on 28 September, based on market values as of 31 August 2020. Index constituents have their index weights capped at 10% at each semi-annual rebalance date. As a result of this, the ‘excess index weights’ are then proportionally redistributed to the remaining constituents. The weights, as of the 28 September balance are tabled below.
| iEdge SG All Healthcare Index 10 Largest Weights (as of 28 Sep) |
SGX Code |
Index Weight as of 29 Sep |
Mkt Cap (S$M) |
Total Return Sep MTD |
Total Return Sep QTD |
Total Return 2020 YTD |
2020 Average Daily Turnover as of 29 Sep (S$M) |
180-Day Volatility |
|---|---|---|---|---|---|---|---|---|
| TOP GLOVE CORP BHD | BVA | 10.0% | 22,604 | -2% | 58% | 438% | 5.79 | 92% |
| IHH HEALTHCARE BHD | Q0F | 10.0% | 14,921 | -3% | -4% | -8% | 0.30 | 33% |
| PARKWAYLIFE REIT | C2PU | 10.0% | 2,474 | 9% | 24% | 27% | 3.36 | 36% |
| HAW PAR CORP LTD | H02 | 10.0% | 2,068 | -1% | -3% | -25% | 1.74 | 24% |
| RIVERSTONE HOLDINGS | AP4 | 10.0% | 2,542 | -14% | 32% | 275% | 9.51 | 74% |
| MEDTECS INTERNATIONAL CORP | 546 | 10.0% | 615 | -26% | 197% | 2955% | 20.52 | 175% |
| RAFFLES MEDICAL GROUP | BSL | 10.0% | 1,501 | -1% | -10% | -17% | 1.46 | 30% |
| FIRST REIT | AW9U | 4.5% | 350 | -12% | -37% | -54% | 1.87 | 66% |
| TIANJIN ZHONGXIN PHARM | T14 | 4.0% | 2,147 | -1% | -5% | 5% | 0.49 | 44% |
| UG HEALTHCARE | 41A | 2.8% | 523 | 12% | 116% | 1721% | 6.94 | 160% |
| Average | -4% | 37% | 532% | 73% | ||||
| Median | -2% | 10% | 16% | 55% |
Source: SGX, Bloomberg, Refinitiv (Data as of 29 September 2020)
As tabled above, there is a significant difference between the median and average total returns of the 10 largest weights of the Index. The asymmetry in the median and average returns was also observed globally with the top quartile of global healthcare stocks generating an average total return of 20% with median total returns of 120% in the 2020 year to 29 September as noted above.
The next 10 largest weights of the iEdge SG All Healthcare Index are tabled below. With less stocks among the 10 that focus on medical supplies, there was less variation between the average and median total returns.
| iEdge SG All Healthcare Index Next 10 Largest Weights (as of 28 Sep) |
SGX Code |
Index Weight as of 29 Sep |
Mkt Cap (S$M) |
Total Return Sep MTD |
Total Return Sep QTD |
Total Return 2020 YTD |
2020 Average Daily Turnover as of 29 Sep (S$M) |
180-Day Volatility |
|---|---|---|---|---|---|---|---|---|
| Q&M DENTAL GROUP SINGAPORE | QC7 | 2.1% | 366 | 0% | 10% | 2% | 0.53 | 46% |
| THOMSON MEDICAL GROUP | A50 | 2.0% | 1,322 | -6% | -11% | -22% | 0.53 | 46% |
| TALKMED GROUP LTD | 5G3 | 1.8% | 501 | -4% | -10% | -24% | 0.01 | 54% |
| VICPLAS INTERNATIONAL LTD | 569 | 1.7% | 170 | -41% | 189% | 260% | 2.52 | 157% |
| IX BIOPHARMA LTD | 42C | 1.6% | 158 | -13% | -8% | 2% | 1.61 | 111% |
| CLEARBRIDGE HEALTH LTD | 1H3 | 1.2% | 97 | -8% | -6% | 15% | 2.41 | 90% |
| SINGAPORE MEDICAL GROUP | 5OT | 1.1% | 123 | 0% | 4% | -14% | 0.39 | 61% |
| BIOLIDICS LTD | 8YY | 1.0% | 90 | -9% | 11% | 39% | 3.10 | 127% |
| HEALTHWAY MEDICAL CORP | 5NG | 0.8% | 145 | -3% | 7% | 23% | 0.30 | 84% |
| ISEC HEALTHCARE | 40T | 0.6% | 163 | 2% | 5% | -10% | 0.00 | 50% |
| Average | -8% | 19% | 27% | 83% | ||||
| Median | -5% | 5% | 2% | 73% |
Source: SGX, Bloomberg, Refinitiv (Data as of 29 September 2020)
Top Glove Reported 412% Net Profit Growth in FY20 & Provided Outlook Beyond 2020
On 17 September, Top Glove Coproation (SGX:BVA) (“Top Glove”) reported its net profit increased 412% from 365 million ringgit in FY19 to 1.9 million ringgit in FY20 (ending 31 August). The FY20 results were released during the session lunch break, with the afternoon session seeing the stock retrace 9% of its preceeding gains. This brought the 12 month total return of Top Glove to 407%, which was relatively symmetric to the reported FY20 net profit growth of 412%.
Top Glove has been a top 50 Singapore stock by turnover in the year thus far with an average of S$5.8 million of shares changing hands on a daily basis in 2020. In addition to being ASEAN’s biggest healthcare stock, 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.
In its outlook, mangement noted that without a readable vaccine to COVID-19, much of the momentum of the Rubber Glove Sector will continue to be in trader’s focus. With COVID-19, Top Glove estimates that glove demand will grow by 20% per annum in 2020, 25% in 2021 and 15% post-COVID-19, noting that notwithstanding news of several promising vaccines in the pipeline, glove demand remains at a supernormal level, as gloves will still be required even when a vaccine becomes available.
Malaysia EPF Becomes Substantial Shareholder of Riverstone Holdings
On 17 September, the Employees Provident Fund Board of Malaysia become a substantial shareholder of Riverstone Holdings (SGX:AP4). The acquisition of 2 million shares on the open market with a consideration of S$6,576,000 was transacted at an average price of S$3.29 per share. This increased the Employees Provident Fund Board of Malaysia direct interest in Riverstone Holdings from 4.86 per cent to 5.13 per cent.
Back on 5 August, Riverstone Holdings posted a 119 per cent increase in net profit to RM137.5 million for its 1HFY20 (ended 30 June). Riverstone Holdings Executive Chairman and CEO Wong Teek Son noted that with the current industry tailwinds, the Group continues to focus on internal initiatives such as adopting automation to improve productivity and reduce its reliance on labor. Mr Wong added that the in-house R&D team continues to monitor industry trends closely and develop new products that will allow the Group to venture into untapped markets including the food processing, pharmaceutical and surgical glove segments.
