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The Better Buy: Singapore O&G Ltd Or ISEC Healthcare Ltd?

Singapore’s stock exchange is home to some interesting healthcare stocks. Most of us would be familiar with household brands such as Raffles Medical Group Ltd and IHH Healthcare Bhd. But besides these, there are other smaller healthcare providers that go under the radar from the general investing public.

In this article, I want to compare two such companies that could potentially boost the health (pun intended) of your portfolio.

Introducing the contenders

The two companies that I will be looking at are ISEC Healthcare Ltd (SGX: 40T) and Singapore O&G Ltd (SGX: 1D8).

ISEC, through its team of 25 doctors, provides specialised eye care service in Singapore and Malaysia. It operates four ambulatory surgical centres in Malaysia and one in Singapore. It also recently expanded its services to family medicine, with four general practitioner clinics in Singapore.

On the other hand, Singapore O&G specialises in women’s health and oncology. In 2017, the group expanded its services to include paediatric services.

Revenue growth

The first comparison is the recent revenue growth record. I will take the last three full year records as reference. Below is a table showing revenue growth for the two companies:

Source: Author’s compilation of data from Morningstar

As you can see, both companies have managed to deliver consistent revenue growth over the last few years. However, Singapore O&G’s pace of growth was faster than that of ISEC.

Earnings growth

Earnings per share growth will help paint a better picture on how the companies manage to translate the higher revenue into meaningful profits.

Source: Author’s compilation of data from Morningstar

Once again, both companies delivered strong earnings growth over the last three years. However, this time, ISEC outpaced Singapore O&G.

Valuation

Finally, we will look at which company is trading at a better price. I will use price-to-earnings as a point of comparison. At the time of writing, shares of ISEC Healthcare Ltd were trading at S$0.29 per piece. This gives it a price-to-earnings multiple of 16.7.

Singapore O&G shares are currently exchanging hands at S$0.35 each. This gives it a price-to-earnings multiple of 15.8.

This shows that Singapore O&G is trading at a slightly lower earnings multiple.

The Foolish bottom line

Both companies look like they are trading at reasonable valuations given their historical growth. However, because ISEC has managed to grow its earnings faster while Singapore O&G’s earnings faltered in 2017, I have to say that ISEC looks to be the safer buy.

That being said, this comparison only looks at three factors. There are other factors that come into play such as market potential, balance sheet strength, patient retention, and so on. Investors should take a look at each aspect of ISEC’s business before making an investment decision.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Raffles Medical Group Ltd. The Motley Fool Singapore contributor Jeremy Chia owns shares in Raffles Medical Group Ltd.