Singapore’s Healthcare Providers

stethoscopeIt is often said that health is wealth. So, it is important to take care of your health because all the money in the world could be worthless if you are not well enough to enjoy it. Everyone can fall sick but fortunately in Singapore we have one of the best healthcare infrastructures to nurse us back to health.

Under the Industrial Classification Benchmark’s (ICB), Healthcare providers are defined as owners and operators of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, rehabilitation and retirement centres.

Let’s take a look at some of the healthcare stocks listed in Singapore.

Company Mkt. cap (m S$) 1-yr Share Performance (%) Price per Earnings (P/E) Net Profit Margin (%) Dividend Yield (%)
Raffles Medical 1,765.43 36.42 28.61 18.38 1.41
Q&M Dental Group 181.64 -18.35 32.97 6.46 2.05
Healthway Medical 167.54 -13.25 5.76 35.18 0.00

Figures are based on estimated trailing twelve months (ttm) results

Founded in 1996, Q & M Dental Group (SGX: QC7) is a private dental healthcare group with more than 55 dental clinics, 4 dental centres, a mobile dental clinic and two dental supplies and equipment distribution companies in Singapore. It has a pool of more than 450,000 island-wide patients and it is also expanding its overseas presence in Malaysia and China.

Recently, Q&M Dental announced that it is acquiring a 60% stake in Chinese dental group Aoxin Stomatology Group, which is based in Shenyang for S$21.6m, to gain a foothold in North-Eastern China. The acquisition is expected to be completed in Feb 2014. The deal will be funded by a mixture of cash and loans or new shares. While Q&M Dental offers bright growth prospects and has a decent yield of 2%, it is valued at 32 times profit.

Healthway Medical Corporation (SGX: 5NG) is one of Singapore’s largest providers of private outpatient medical services. Operating from a centralised platform, it offers healthcare services across the medical value chain in primary healthcare, dental and specialist services. The Group operates 11 medical practice groups, comprising more than 80 clinics.

The shares have risen sharply this year but fell recently on news that 95m new shares will be issued. While the company looks reasonably valued and the profit margin looks solid, investors should be aware that the numbers include the sale of financial assets that are not directly related to daily operations.

Founded in 1976, Raffles Medical Group (SGS: R01) has grown consistently over the years to become a leading medical company and the largest private group practice in Singapore. RMG serves over one million patients and 6,500 corporate clients today through a network of 78 multi-disciplinary clinics across Singapore, and four medical centres in Hong Kong and Shanghai.

Raffles Medical Group has a number of divisions. Around 62% of its revenues come from hospital services through its flagship Raffles Hospital. About a third of revenue comes various segments that include Raffles Medical, Raffles Dental and the burgeoning Raffles Health Insurance. The remaining 3% comes from its investment holdings.

RMG financial summary

A quick look at Raffles Medical’s financial performance over the last five years shows that its revenue and profits have grown at a healthy pace. RMG has also proven to be a resilient business even during the recent financial crisis in 2008 and  2009.

Foolish Bottom Line

Investors may have patronised some of the companies mentioned above since they do have a strong presence in Singapore. However, it is important to understand what you are investing in.

It would seem that healthcare providers are heading overseas in search of growth as the local market reaches saturation. However, the question is whether they will be as successful abroad as they have been on their home turf.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice .   Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.