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The Silver Tsunami in Singapore: Shares Investors Can Buy

In a recent article, my Foolish colleague Royston Yang discussed two industries which he thinks are recession-proof. One of them was the healthcare indutsry. Royston wrote:

“[T]he ageing population in many mature economies is a sign that healthcare is needed more than ever. Some reports refer to this as the “silver tsunami” and predict that in 20 to 30 years, even more healthcare facilities will be built as demand for services begins to outstrip current supply.”

Singapore is not spared from the ageing population trend. By 2030, one in four Singaporeans is expected to be over 65. To make things worse, our city-state has one of the world’s highest life expectancy. So, what are some of the Singapore-listed companies that cater to the silver tsunami? Let’s take a look.

Healthcare service providers

In Singapore, there are 18 listed healthcare service providers. These companies provide a wide range of services, including services required by the elderly. Some of those medical outfits are IHH Healthcare Bhd (SGX: Q0F), Raffles Medical Group Ltd (SGX: BSL), Singapore Medical Group Ltd (SGX: 5OT) and Asian Healthcare Specialists Ltd (SGX: 1J3).

The largest healthcare provider of the lot is IHH Healthcare, which is the top private healthcare provider in our city-state by number of licensed beds. It owns four hospitals in Singapore, namely, Gleneagles Hospital, Mount Elizabeth Hospital, Mount Elizabeth Novena Hospital, and Parkway East Hospital.

Asian Healthcare Specialists is the smallest among the four healthcare companies mentioned. It provides orthopaedic, trauma, and sports medicine services. In its outlook statement as part of its 2018 earnings release, the company commented (emphasis is mine):

“On the back of a growing and ageing population, coupled with an increasing percentage of insured patients in Singapore and the region, the growing demand for medical services in Singapore is expected to continue, which the Group anticipates that it would result in an increased demand for the Group’s medical services. Nonetheless, the Group is mindful that the healthcare business remains highly competitive.”

Rehabilitation services

Rehabilitation services provide an avenue for seniors to regain their mobility.

A company involved in the rehabilitation space is Boustead Singapore Limited (SGX: F9D). Even though it is mostly an infrastructure-related engineering services and geo-spatial technology solutions company, Boustead Singapore recently acquired a healthcare businessw which distributes rehabilitative medical equipment, and also provides a leasing model bundled with services to hospitals and rehabilitative clinics.

Even though the healthcare segment contributed just below 3% of Boustead Singapore’s total revenue in its latest fiscal third quarter, the company believes the new business will help to “fill an underserved gap in the market, especially in relation to sizeable ageing populations across Asia.” The following chart shows the growth potential of Boustead Singapore’s healthcare business in Singapore and the region:Source: Boustead Singapore healthcare business presentation

Nursing homes

Nursing homes provide a home away from home for elderly residents. One of the first companies that come to my mind when the word “nursing homes” is mentioned is First Real Estate Investment Trust (SGX: AW9U). In Singapore, the real estate investment trust (REIT) owns Pacific Healthcare Nursing Home II @ Bukit Panjang, Pacific Healthcare Nursing Home @ Bukit Merah, and The Lentor Residence.

Another company that runs nursing homes is Singapore Press Holdings Limited (SGX: T39). In April 2017, the media giant acquired Orange Valley, Singapore’s largest private nursing home operator. Singapore Press Holdings’ chief executive, Alan Chan, said the following in the company’s media release upon the acquisition:  

“Singapore has a greying population with a need for long term medical care. The investment gives us an opportunity to contribute to the healthcare needs of our ageing community. We look forward to partnering the management and staff of Orange Valley to provide caring, competent and compassionate service to the elderly and their caregivers. We also look forward to working with the Ministry of Health and the regional healthcare systems to improve the accessibility and quality of aged care in Singapore.”

The Foolish takeaway

The rapidly ageing global population is often touted as an investment megatrend. Singapore is not spared from a greying population too. Investors who wish to invest in this important demographic shift could consider the companies mentioned earlier. However, they should perform further research on the companies – such as examining their financial performance, valuation, and so on – before investing in them.

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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 recommendations on Raffles Medical Group, Boustead Singapore and First REIT. Motley Fool Singapore contributor Sudhan P owns shares in Raffles Medical Group and Boustead Singapore.