Thursday, December 12, 2013

Healthcare Sector: Expecting growth in 2014 (OCBC)

Healthcare Sector:
Expecting growth in 2014

Despite continued macroeconomic uncertainties in 2013, quality healthcare companies such as Raffles Medical Group (RMG), IHH Healthcare Berhad and Riverstone managed to showcase their resilience and defensive qualities with their robust financial performance. Nevertheless, not all healthcare companies enjoyed similar success stories in 2013, as Biosensors International Group (BIG) disappointed with a sharp 1HFY14 earnings dip.
Looking ahead, positive fundamentals which are structural and entrenched in nature will continue to drive growth in 2014. However, key risks would stem from intensifying competition and continued depreciation of emerging market currencies (especially the IDR). We are also cautious on medical device and pharmaceutical companies with significant exposure to the Chinese market due to ongoing regulatory price controls. Maintain OVERWEIGHT on the healthcare sector, with a preference towards healthcare service providers. Our top sector pick is RMG [BUY; FV: S$3.61]. We also have a SELL rating on BIG with a fair value estimate of S$0.80.

Quality healthcare companies continued to deliver growth
Despite continued macroeconomic uncertainties in 2013, quality healthcare companies such as Raffles Medical Group (RMG) and IHH Healthcare Berhad (IHH) managed to showcase their resilience and defensive qualities. Revenue for RMG and IHH rose 10.7% and 17.8% (excluding non-recurring recognition of sale of medical suites), while core earnings were up 14.0% and 45.2%, respectively, for 9MCY13. Both healthcare service providers saw an increase in patient loads and higher revenue intensities, despite the weakening currencies of regional emerging countries such as the IDR against the SGD. Another notable strong performer was Riverstone Holdings, which registered a stellar 34.3% PATMI growth for 9MCY13, underpinned by rising demand for its high-quality healthcare gloves. Nevertheless, not all healthcare companies enjoyed similar success stories in 2013, as Biosensors International Group (BIG) disappointed with a sharp 59.0% plunge in its core PATMI to US$23.6m on the back of a 3.8% fall in its revenue to US$159.7m for its 1HFY14 results. This was attributed to ASP pressures and lower licensing and royalties revenue.

Outlook still positive, but prefer healthcare service providers
Looking ahead, dynamics in the healthcare sector continue to be driven by positive fundamentals which are structural and entrenched in nature. Issues such as an aging population, increasing disease burden, rising affluence in the region and strengthening medical tourism trend imply that the underlying growth drivers would likely persist in the long run. However, we are more cautious on medical device and pharmaceutical companies with significant exposure to the Chinese market. This is because ongoing regulatory price controls may continue to exert pressure on margins and cast an overhang on the share prices of these companies in the near future, in our view.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 10/12/13

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Warren E. Buffett(沃伦•巴菲特)
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别人贪婪时我恐惧, 别人恐惧时我贪婪
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做自己熟悉的事,等到发现大好机会才投钱下去

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“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

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高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
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1.有智慧,不如趁势
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成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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