Value in the Health Care Sector

stethoscopeThere are no fewer than ten big-name players in the healthcare sector here in Singapore. They range from IHH Healthcare (SGX: Q0F) with a market value of around S$13 billion to Riverstone Holdings (SGX: AP4), which has a market cap of just S$330m.

With healthcare stocks valued at around twice the market average, you might think that there is no value to be found in the healthcare sector.

However, closer inspection suggests this might not necessarily be the case. Admittedly, companies such as IHH, which is trading at nearly 60 times earnings and only yields 0.4% does not represent screamingly good value. But Talkmed Group (SGX: 5G3), on the other hand, which provides oncology services, trades at just five times earnings. It could provide better value opportunities.

Incorporated in 2013 and based in Singapore, Talkmed provides services under the Parkway Cancer Centre brand name to patients suffering from various forms of cancer. Its price to book of 16 and dividend yield of 1.1% might raise an eyebrow or two, though.

Haw Par Corporation (SGX: H02) is a company with a long and interesting history. It is currently trading below its book value and coupled with a PE ratio and dividend yield around the market average could make it a source of potential value in the, arguably, overpriced healthcare sector. A continuation of the steady growth in revenue the company has seen over the last five years could just add to its allure.

Religare Health Trust (SGX: RF1U), which was founded in 2011, doesn’t quite possess the same rich vein of history as Haw Par. However, with a dividend yield of around 9%, it could catch some value investors’ attention. Religare’s investment mandate is to invest in healthcare assets in Asia, Australasia and emerging markets across the globe. In the last year the company saw gross profits double.

Whilst there are no companies that immediately tick all the boxes required by a value investor, there are certainly some companies that could be worth keeping an eye on.

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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 Adam Kuo doesn’t own shares in any companies mentioned.