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The Healthcare Industry – Healthcare Service Providers

doctor tools The saying goes: Health is Wealth. It is important to take care of your health because all the money will 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 in place to nurse us back to health.

This article is the second in a series of articles where we’ll be exploring the Health Care Industry. We started by taking a look at the industry and highlighted some of its investment characteristics. The Industrial Classification Benchmark (ICB), a system used to categorise over 70,000 companies and 75,000 securities worldwide, splits the Healthcare Industry into sectors.  In this article, we’ll be exploring some of the companies under the Health Care Provider subsector. According to the ICB, Health Care 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 Health Care Providers here in Singapore.

Company

Market Cap (M SGD)

1 Year Share Performance (%)

Price per Earnings (P/E)

Net Profit Margin (%)

Dividend Yield (%)

Raffles Medical (SGX: R01)

1,765.43

36.42

28.61

18.38

1.41

Q&M Dental Group (SGX: QC7)

181.64

-18.35

32.97

6.46

2.05

Healthway Medical (Catalist: 5NG)

167.54

-13.25

5.76

35.18

0.00

Figures are estimated to be as accurate as possible based on trailing twelve months (ttm) results

Founded in 1996, Q & M Dental Group Limited 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. On top of having a large patient pool of more than 450,000 island-wide, it is still expanding its overseas presence in the Malaysia and China.

Recently, Q&M Dental announced that it is acquiring a 60% stake worth S$21.6 million in Chinese dental group (Aoxin Stomatology Group, based in Shenyang), to gain a foothold in North-Eastern China. The acquisition is expected to be complete on Feb 2014 and funded by a mixture of internal cash, loans or issuance of new shares. While Q&M Dental offers bright growth prospects and a decent yield of 2%, investors have to balance that out against a premium P/E ratio of 32.

Healthway Medical Corporation Limited is one of Singapore’s largest network of private outpatient medical service providers. Operating from a centralised platform, it offers quality 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 stock has been on a tear for the past few months perhaps due to the recent proposed placement of an additional 95 million new shares, leading to a significant share dilution. While figures for its Price-to-earnings ratio and profit margin looks like it’s a good investment, investors need to know that the numbers are inflated due to a gain on disposal of available-for-sale financial assets and not directly related to the daily operations.

Founded in 1976, Raffles Medical Group (RMG) has grown consistently over the years to become a leading medical group 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 is an umbrella of different divisions. Out of the total revenue, around 62% stems from hospital services under RafflesHospital, the flagship of Raffles Medical Group. Another 35% is contributed via various segments – Raffles Medical, Raffles Dental and the burgeoning Raffles Health Insurance. The remaining 3% comes from its investment holdings.

A quick look at Raffles Medical’s past 5 years of financial performance shows that its revenue and profits have been growing consistently at a healthy pace. RMG also proves to be a resilient business as the financial results continue to deliver a positive note even during the financial crisis (year 2008 & 2009).

Foolish Bottom Line

Going forward, healthcare providers are heading overseas in search of growth as the local market reaches saturation point. Now, the question remains as to whether the companies will be successful in their internationalisation efforts.

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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.