In the 2017 year-to-date, the SGX All Healthcare Index has registered a price gain of 2.7%, outperforming the MSCI AC Asia ex Japan Health Care Index’s 1.9% in Singapore dollar terms.
The five best-performing index constituents have averaged a price return of 63.8% in the year-to-date: Suntar Eco-City (+113.3%), International Healthway Corp (+76.0%), STAR Pharmaceutical (+44.8%), Singapore Medical Group (+42.5%), and Healthway Medical Corp (+42.4%).
Many Singapore-listed healthcare providers are leveraging on the industry’s favourable demand trends, expanding into regional and/or global markets to meet growing patient needs. Among the 10 constituent stocks with the highest weightings in the SGX All Healthcare Index, six of them own and/or operate healthcare facilities and assets, including clinics and hospitals, located outside Singapore.
The SGX All Healthcare Index
The SGX All Healthcare Index is a free-float, market capitalisation-weighted index that measures the performance of the listed healthcare sector in Singapore. Currently, the five largest components by index weight are Parkway Life REIT, Top Glove Corp, Haw Par Corp, First REIT and IHH Healthcare. These five stocks make up more than half the index, and in the 2017 year-to-date, they have averaged a price return of 7.3%. Haw Par Corp generated the highest price return of 21.1% over the period.
In the 2017 year-to-date, the SGX All Healthcare Index has registered a price gain of 2.7%, outperforming the MSCI AC Asia ex Japan Health Care Index’s 1.9% in Singapore dollar terms.
Best-Performing Index Constituents
The five best-performing index constituents have averaged a price return of 63.8% in the year-to-date. They are Suntar Eco-City (+113.3%), International Healthway Corp (+76.0%), STAR Pharmaceutical (+44.8%), Singapore Medical Group (+42.5%), and Healthway Medical Corp (+42.4%).
The table below details the 29 stocks in the SGX All Healthcare Index, sorted by index weight. Click on the stock name to see its profile page on
StockFacts.
Source: SGX, Bloomberg & SGX StockFacts (data as of 28 August 2017)
Tapping Healthcare Demand Beyond Singapore
Many Singapore-listed healthcare providers are leveraging on the industry’s favourable demand trends – such as Asia’s rapidly ageing population, increase in lifestyle diseases, rising disposable incomes and higher per capita healthcare spending – and are expanding into regional as well as global markets to meet growing patient needs.
Among the 10 constituent stocks with the highest weightings in the SGX All Healthcare Index, six of them – Parkway Life REIT, First REIT, IHH Healthcare, RHT Health Trust, Raffles Medical Group and Health Management International – all own and/or operate healthcare facilities and assets, including clinics, hospitals and treatment centres, located outside Singapore. PLife REIT, First REIT and IHH, which have the highest index weightings, are detailed below.
Parkway Life REIT
Parkway Life Real Estate Investment Trust is one of Asia’s largest listed healthcare REITs by asset size. It owns the largest portfolio of strategically located private hospitals in Singapore, comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. It also owns 44 high quality nursing home and care facility properties in various prefectures of Japan, and strata-titled units/lots at Gleneagles Intan Medical Centre Kuala Lumpur in Malaysia. The REIT, with a market capitalisation of S$1.6 billion on SGX, has the highest weighting – at 10.9% – in the SGX All Healthcare Index.
On 25 July, PLife REIT reported a 10.3% YoY rise in distribution per unit (DPU) to 3.32 Singapore cents for the three months ended 30 June 2017. Gross revenue for the period increased 1.1% YoY to S$27.7 million, while net property income gained 1.4% YoY to S$25.9 million. (click
here for the earnings release)
With rising domestic inflation, PLife REIT’s Singapore properties are set to enjoy a 1.27% increase in Minimum Guaranteed Rent for the 11th year of lease term (23 August 2017 to 22 August 2018) over the total rent payable for the previous year, it said in the earnings statement. The trust also has no long-term debt refinancing needs till 2019, with all-in cost of debt lowered from 1.4% to 1.1%. With the adoption of prudent capital and risk management strategies, its interest rate exposure has been largely hedged, insulating it from any related headwinds.
First REIT
First Real Estate Investment Trust has a portfolio of 18 properties – ranging from nursing homes to hospitals – located in Indonesia, Singapore and South Korea. The trust has a market capitalisation of over S$1 billion and a weighting of 10.2% in the SGX All Healthcare Index.
On 17 July, First REIT posted a 1.4% YoY gain in distribution per unit (DPU) to 2.14 Singapore cents for the three months ended 30 June 2017. Gross revenue and net property income for the quarter rose 3.3% YoY and 3.2% YoY to S$27.5 million and S$27.2 million respectively. (click
here for the earnings release)
With its sponsor PT Lippo Karawaci Tbk having a strong pipeline of over 40 healthcare assets in Indonesia for acquisition, the trust plans to acquire one or two high-quality properties this year to further boost its income stream, Victor Tan, Acting Chief Executive Officer of Bowsprit Capital Corporation, the manager of the REIT, said in its results statement.
IHH Healthcare
IHH Healthcare, the second largest healthcare group in the world by market capitalisation, is listed on Bursa Malaysia and the Mainboard of SGX. Its operations span Malaysia, Singapore, Turkey and India. The stock has a market capitalisation of S$15 billion on SGX, and a weighting of 9.8% in the SGX All Healthcare Index.
On 23 August, IHH reported a 12% YoY rise in revenue to RM2.77 billion for the three months ended 30 June 2017, as profit after tax and minority interests rose 29% YoY to RM316.6 million. This was due to sustained growth in inpatient admissions and the ramp up of new hospitals, including Gleneagles Hong Kong, as well as Turkey’s Acibadem Altunizade Hospital and Acibadem Atakent University Hospital. Tokuda Group and City Clinic Group in Bulgaria, acquired in June 2016 and since consolidated into Acibadem, also contributed to the higher revenue. (click
here for the earnings release)
IHH Chief Executive Officer Tan See Leng said in the earnings statement that the Group continues to believe in sustained demand for quality private healthcare in its home and key growth market of Greater China. “We look forward to our next phase of growth, especially in Greater China, where we have laid out plans to make it our fifth home market after Malaysia, Singapore, Turkey and India,” he added.
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