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Is There Value in Singapore’s Healthcare Industry?

The healthcare industry is a resilient one. No matter what the economy does, there would be demand for doctors. An ageing population and the rising affluence in Singapore should also bode well for healthcare companies here.

With the rising trade tensions worldwide, it is not surprising that the healthcare stocks in Singapore have performed well. Shares in the industry have risen some 11% over the past one year.

But, are there good value opportunities still around? Let’s find out by comparing three stocks in the industry.

Raffles Medical Group Ltd (SGX: BSL) is one of the largest private healthcare groups in Singapore. Established in 1976, it now has a presence in 13 cities across Asia, serving more than 2.2 million patients.

The healthcare company has seen its share price deteriorate in the past few years mainly due to slowing growth in its business. However, there are potential upsides for the company with the expansion of its flagship Raffles Hospital in Singapore, and the opening of new hospitals in China.

As of yesterday’s share price of S$1.14, the company had a price-to-earnings (PE) ratio of 29 and a dividend yield of 1.9%.

ISEC Healthcare Ltd (SGX: 40T) and Singapore O&G Ltd (SGX: 1D8) are smaller players in the healthcare industry. They also offer a smaller scope of services than Raffles Medical.

For the past three years, ISEC’s bottom line has grown by 42% annually while that of Singapore O&G has increased by only 16.7% per year. For an in-depth comparison of the two healthcare outfits, you can head here.

ISEC is trading at a PE ratio of 18 and Singapore O&G sports a PE ratio of 16. Both offer dividend yield of around 5%, which looks juicy.

At a low PE ratio and high dividend yield, Singapore O&G seems to be the most valuable healthcare stock among the trio. However, I prefer Raffles Medical for the growth opportunities that it has.

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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 Sudhan P owns shares in Raffles Medical Group Ltd.