Healthcare companies are generally considered as defensive stocks since their services are needed when the economy’s good as well as bad. The defensive nature of their businesses also makes healthcare companies attractive to investors.
There are many healthcare companies in Singapore’s stock market and you might want to know which is a better investment opportunity. There’s no easy answer, but I want to directly compare the important business and valuation aspects of two healthcare services providers – Raffles Medical Group Ltd (SGX: BSL) and Singapore O&G Ltd (SGX: 1D8) – in a mini article-series.
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This article is the first in the series and it compares the most recent quarterly earnings updates of the two companies. The objective is to find out which company reported better results.
Raffles Medical is a leading integrated private healthcare provider in the region. In Singapore, it has a large network of clinics and medical centres, in addition to its flagship Raffles Hospital, which provides tertiary medical care. The company also has medical facilities beyond Singapore in 12 cities across China, Japan, Vietnam, and Cambodia. The medical facilities in China include two hospitals that Raffles Medical is developing in Chongqing and Shanghai; the hospitals are expected to be completed in the fourth quarter of 2018 and the second half of 2019, respectively.
Meanwhile, Singapore O&G is a specialist healthcare services provider that has a focus on women’s health. The company has four business arms: Obstetrics and Gynecology; Cancer-related; Pediatrics; and Dermatology. Singapore O&G sources all its revenue from Singapore at the moment.
In 2018’s second quarter, Raffles Medical reported a 0.1% year-on-year increase in revenue to S$120.2 million. Operating profit was up 3.5% to S$20.3 million while net profit stepped up by 3.6% to S$16.8 million. It was, overall, a flattish performance from Raffles Medical.
For the same quarter, Singapore O&G posted a 19.0% jump in revenue to S$8.6 million, a 66.5% surge in operating profit to S$4.4 million, and an even more impressive 75.3% increase in net profit to S$3.8 million.
The Foolish Conclusion
Looking at all the above, Raffles Medical and Singapore O&G both managed to deliver growth in their latest quarterly earnings updates. But of the two, Singapore O&G is clearly ahead with its superior growth rates. With that, stay tuned for the next installment of my series as I try to discover which of the two companies would be a better investment opportunity – the next piece will be coming soon! [Editor’s note: The second and third article in the series has been published. They can be found here and here.]
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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation on Raffles Medical Holdings Ltd.