The SGX All Healthcare Index generated a total return of 16.2% over the past 12 months, outperforming the MSCI AC Asia Pacific Ex Japan Healthcare Index and the MSCI World Healthcare Index, which generated total returns of -0.5% and 10.4% respectively.
The five best-performing stocks in the SGX All Healthcare Index excluding International Healthway Corporation are Talkmed Group (+35.8%), Singapore Medical Group (+34.5%), Healthway Medical Corporation (+24.2%), AsiaMedic (+10.4%) and Singapore O&G (+10.2%). The five stocks averaged a total return of 23.0% and 94.3% in the YTD and one year respectively.
Long-term structural drivers also underpin growth of the Asian Healthcare Sector. Rising affluence and ageing demographics in the region are spurring long-term demand for healthcare products amidst the backdrop of limited supply.
SGX All Healthcare Index
The SGX All Healthcare Index has generated a total return of 3.0% in the year to date, while the MSCI AC Asia Pacific Ex Japan Healthcare Index and the MSCI World Healthcare Index have generated total returns of 3.6% and 4.6% respectively. However, on a 12-month basis, the SGX All Healthcare Index outperformed the other two indexes, registering a total return of 16.2% versus the MSCI AC Asia Pacific Ex Japan Healthcare Index’s -0.5% and the MSCI World Healthcare Index’s 10.4%.
Source: Bloomberg (data as of 22 February 2017)
Currently, of the 27 constituents of the Index, 19 belong to the Healthcare Providers & Services Industry as classified by the Global Industry Classification Standards (GICS®). The other sub-industries within the Index are Commercial Services & Supplies industry, Healthcare REITs, and Pharmaceuticals. More information on the historical performance and schematics of the Index can be found
here.
The five-best performing stocks in the YTD in the SGX All Healthcare Index excluding International Healthway Corporation are Talkmed Group (+35.8%), Singapore Medical Group (+34.5%), Healthway Medical Corporation (+24.2%), AsiaMedic (+10.4%) and Singapore O&G (+10.2%). The five stocks averaged a total return of 23.0% and 94.3% in the YTD and one year respectively. All Index constituents averaged a YTD return of 6.7% and one-year return of 21.6%.
Long Term Structural Drivers Underpin Asian Healthcare Sector
There are multiple opportunities and challenges in the ongoing supply and demand for healthcare services across the Asian healthcare industry in the longer term. On the demand side, Asia’s population is growing, as is longevity. Rising affluence and ageing demographics will be key structural drivers.
Notably, industry reports have highlighted that the share of population aged over 65 years in Asia is set to quadruple by 2050, which will inevitably lead to increased demand for healthcare services.
On the supply side, the number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. With limited fiscal funding covering a range of sectors beyond healthcare, there is an increasing role for corporations to engage these opportunities and challenges.
Investors have the opportunity to participate in the structural Asian healthcare theme through SGX-listed stocks. Specifically, the 10 largest healthcare stocks provide significant regional exposure, with only an average 33% of their revenues coming from Singapore, compared to 60% revenue exposure from Asia Pacific excluding Singapore (based on the last financial year). There are 32 Healthcare-related companies listed on SGX, comprising 29 stocks, two REITs and one Business Trust. They have a combined market capitalisation of S$37 billion. For more information, please click
here.
Singapore Budget 2017
As Singapore’s population ages, the government’s annual healthcare spending has doubled over the last five years, with enhanced subsidies and expanded services bringing the total to S$10 billion last year, Singapore’s Finance Minister Heng Swee Keat said in his Budget 2017 statement on Monday (click
here for more details on the latest Budget).
This figure is expected to continue to rise as Singapore’s population ages, he added. Healthcare expenditure is projected to rise by S$900 million – up 9.6% – mainly to cater for higher patient subsidies as capacity, patient numbers and services expand. Part of the increased spending is also attributable to the funding of Medishield Life premium subsidies, Heng noted.
| |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
| Health Expenditure S$B |
2.0 |
2.3 |
2.8 |
3.7 |
3.9 |
4.1 |
4.9 |
6.0 |
7.3 |
8.7 |
Estd. 10 |
| Health Expenditure/GDP % |
0.8 |
0.8 |
1.1 |
1.3 |
1.2 |
1.2 |
1.3 |
1.6 |
1.9 |
2.2 |
- |
Source:
www.moh.gov.sg
Increased healthcare spending from the government in terms of subsidies and services will help boost the sector in Singapore as residents will be encouraged to seek healthcare services when required. The projected increase in spending will therefore bode well for the future of healthcare companies listed on SGX.
Highlights of Best-Performing Constituents in SGX All Healthcare Index
International Healthway Corporation was the best-performing stock in the SGX All Healthcare Index due to an ongoing takeover offer by OUE. Also, of the five, Talkmed Group and Singapore O&G recently announced their earnings for the full year ended 31 December 2016. Both reported positive net income, with Singapore O&G posting a 64.8% YoY increase in net profit while Talkmed’s earnings remained relatively unchanged.
International Healthway Corporation
International Healthway Corporation is currently the best-performing constituent of the Index, generating a total return of 110.0% in the year thus far. On 16 February 2017, OUE launched a takeover offer for IHC. OUE agreed to buy another 35.77% stake in IHC, which will increase its stake in the company to 57.6%. Click
here to view the announcement by OUE on the acquisition.
Within the five best-performing stocks excluding International Healthway Corporation, Talkmed Group and Singapore O&G recently announced their earnings for the year ended 31 December 2016. Both reported positive net income with Singapore O&G reporting a 64.8% YoY increase while Talkmed Group’s profits remained relatively unchanged.
Talkmed Group
Apart from International Healthway Corporation, Talkmed Group is the best-performing constituent of the Index in the YTD. On 21 February 2017, Talkmed announced its earnings for the year ended 31 December 2016 and reported a net income of S$37million, unchanged from the year before. The Company reported 4Q 2016 earnings of S$10 million, up 5.4% from the year before. Click
here for the earnings release.
Talkmed Group was founded in 1997 and is based in Singapore. It operates primarily through two segments, Oncology and Stem Cells Services. The group currently functions through 12 doctors at seven clinics in several private hospitals and medical centres in Singapore.
Singapore O&G
On 16 February 2017, Singapore O & G announced its earnings for year ended 31 December 2016 and reported a net income of S$9 million, which was a 64.8% increase from the year earlier. Click
here for the earnings release.
Singapore O&G was founded in 2011 and provides specialised medical serves for women. It operates through three segments, Obsetrics & Gynaecology, Cancer-Related and Dermatology. The company currently operates through 11 clinics in seven locations in Singapore.
The table below details the constituents of the SGX All Healthcare Index sorted by market capitalisation. Click on each stock to visit its profile page on SGX StockFacts.
Source: SGX, Bloomberg & SGX StockFacts (data as of 22 February 2017)
The SGX All Healthcare Index comprises stocks that report at least half their revenues from healthcare in the last financial year, as well as REITs with investments in healthcare facilities. As of 22 February 2017, the index, which is free-float and market capitalisation-weighted, consists of 27 constituents with a total market capitalisation of S$32.7 billion. The weightings of index components are capped at a maximum 10% at each periodical rebalance, so that it is better diversified across a range of stocks.
SGX My Gateway
SGX’s investor education portal with market, product and investment information and events. Sign up now at
sgx.com/mygateway to receive our investment updates and economic calendar.
This document is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject SGX to any registration or licensing requirement. This document is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document has been published for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. While SGX and its affiliates have taken reasonable care to ensure the accuracy and completeness of the information provided, they will not be liable for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information. Neither SGX nor any of its affiliates shall be liable for the content of information provided by third parties. SGX and its affiliates may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document is subject to change without notice.
