Singapore Strategy 2019 ~ Healthcare Sector - RHB Invest 2018-12-14: Not In The Pinkest Of Health

Singapore Strategy 2019 - Healthcare Sector  ~ RHB Research | SGinvestors.io SINGAPORE MEDICAL GROUP LTD (SGX:5OT) IHH HEALTHCARE BERHAD (SGX:Q0F) RAFFLES MEDICAL GROUP LTD (SGX:BSL) HEALTH MANAGEMENT INTL LTD (SGX:588)

Singapore Strategy 2019 ~ Healthcare Sector - Not In The Pinkest Of Health

  • Maintain NEUTRAL on the healthcare sector, with Singapore Medical Group as our Top Pick.
  • Strong headwinds for the sector persist. Private healthcare players in Singapore continue to experience declining foreign patient loads, as competitors in neighbouring countries improve their standards and are more cost-competitive.
  • The Singapore Government is also keeping tabs on rising healthcare costs, which may limit the ability for private healthcare players to raise prices.



Competition from foreign players.

  • As healthcare costs in neighbouring countries like Malaysia and Thailand are much lower, they have been attracting medical tourists from the region – thereby eating into Singapore's market share. This is further exacerbated by the strengthening of SGD against regional currencies.
  • On top of that, healthcare providers in these countries have also invested in better medical equipment and improved the quality of services over the years. Although there is no official data on the number of medical tourists, our channel checks with the companies under our coverage suggest that these numbers have been declining y-o-y. We believe this is a structural problem, and will continue to impact the Singapore players in the near term.


Government keeping tabs on rising healthcare costs, impacting margins.

  • We think that some of the private healthcare providers’ margins will be negatively impacted, with the local government keeping tabs on rising healthcare costs, due to public discontent. In 2018, the Government published a guide of treatment fees, which will also deter private players from overcharging patients.
  • In addition, healthcare insurance providers no longer offer integrated shield policies that cover 100% of medical costs. This could lead to lesser demand for private healthcare, as patients need to fork out at least a portion of the medical bills through cash.


Private hospitals are in a capex-intensive expansion phase.



NEUTRAL on the sector.






Juliana Cai CFA RHB Securities Research | Jarick Seet RHB Invest | Lee Seng Choon CFA RHB Invest | https://www.rhbinvest.com.sg/ 2018-12-14
SGX Stock Analyst Report BUY MAINTAIN BUY 0.560 SAME 0.560
NOT RATED MAINTAIN NOT RATED 99998 SAME 99998
NEUTRAL MAINTAIN NEUTRAL 1.020 SAME 1.020
NOT RATED MAINTAIN NOT RATED 99998 SAME 99998





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