Singapore: Best healthcare services stocks return 15% year-to-date

The five best-performing healthcare services stocks in Singapore have returned 15% year-to-date according to a new Market Update from the SGX.

Singapore’s healthcare sector is typically viewed as a defensive segment. 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.

Frost & Sullivan estimates that the Asia-Pacific healthcare industry expanded by 11% to US$517bn in 2018 – representing one of the fastest growing regions worldwide – compared with an average 4.8% growth rate for the global healthcare sector.

The positive expansion is fuelled by increasing adoption of technology, innovative healthcare access programmes and delivery of care outside traditional hospital settings.

As a result, over the last 10 years, the market capitalisation of Singapore’s healthcare sector – comprising primary and secondary listings – has increased nearly 13-fold. In comparison, the market cap of healthcare stocks listed in the region’s emerging markets has grown by 4.4x, while the market value of healthcare listings in Asia’s developed markets has expanded by 3.8x, over the same period.

The listed healthcare sector in Singapore, as tracked by the benchmark iEdge SG All Healthcare Index, comprises companies that operate in the segments of pharmaceuticals and biotechnology, healthcare and patient services, as well as medical equipment and supplies.

In the 2019 year-to-date, the iEdge SG All Healthcare Index has registered a price gain of 3%, compared with gains of 10.6% for the benchmark Straits Times Index (STI), 8.9% for the MSCI AC Asia ex-Japan Health Care Index, and 7.7% for the MSCI ACWI Asia Health Care Index.

There are 18 healthcare service providers listed on SGX that operate patient care services and facilities in Singapore and worldwide. These facilities include laboratories, hospitals, nursing homes and clinics that offer services and treatments ranging from family medicine, dentistry, endoscopy and aesthetics to gynaecology, oncology, paediatrics, orthopaedics, ophthalmology and even cord blood banking. These 18 healthcare services plays have a combined market capitalisation of more than S$40 billion.

Some of the healthcare services companies that have listed on SGX in the last two years include Medinex Ltd (December 2018), Asian Healthcare Specialists (April 2018), Clearbridge Health (December 2017), and Aoxin Q & M Dental (April 2017).

So far this year, the five best-performing healthcare service providers were: ISEC Healthcare (+26.5%), Cordlife Group (+15.6%), Singapore Medical Group (+12.5%), Singapore O&G (+11.4%), and Medinex Ltd (+7.4%).

The five have averaged a year-to-date total return of +14.7%, which brings their one-year, three-year and five-year total returns to -4.6%, +29.9% and +19.4% respectively.