OCBC stays Overweight for Singapore healthcare sector

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD
Research House: OCBC

OCBC stays Overweight Singapore’s healthcare sector, which it says “thrives upon steadfast fundamentals such as a greying population and improving health awareness.”

It notes the FTSE ST Health Care Index has declined 2.9% YTD, less than the broader market’s 4.6% fall. In the healthcare providers segment, it has a BUY rating on Raffles Medical (R01.SG) with a $2.45 fair value; in the medical device space, it rates Biosensors (B20.SG) at Buy with a $1.36 fair value ($1.13 accounting for dilution).

The house says rising wealth is likely to result in higher demand for private healthcare services; the expansion of Medisave to cover outpatient treatment for more diseases and screening will help reduce out-of-pocket expenses, so “private healthcare providers would be able to benefit from an increased takeup in their services.”

It views any move to means testing positively, “as it encourages wealthier people to takeup private healthcare services.” It adds, medical tourism is thriving, +19% in receipts to $940 million in 2010, “but competition is heightening.”