Health is wealth, as the saying goes.
As Singapore’s population ages, the government will increase its healthcare spending in tandem with this trend.
Those aged 65 and above formed 16% of Singapore’s population last year, up from just 9% in 2010.
By 2030, one in four Singaporeans will be in this category.
Singapore’s Budget 2022 had stated that healthcare spending will hit around S$27 billion, or 3.5% of gross domestic product, by 2030.
Healthcare and medical stocks stand to benefit from this long-term trend as such businesses provide products and services for this demographic.
Here are three medical stocks that reported surging profits that you may consider adding to your investment watchlist.
Q & M Dental Group (SGX: QC7)
Q & M Dental owns the largest network of private dental outlets in Singapore, with 98 located across the island.
The group also operates five medical clinics and a dental supplies and equipment distribution company.
In addition, Q & M Dental also owns 38 dental clinics in Malaysia and is a substantial shareholder in Aoxin Q & M Dental Group (SGX: 1D4), which has dental clinics and hospitals in China.
For its fiscal 2021 (FY2021), the group reported a 49% year on year jump in revenue to S$205.6 million.
Net profit nearly doubled year on year to S$39.4 million, hitting a record high.
The reason for the increase is a more than a four-fold surge in revenue for its medical laboratory division to S$45.4 million. The laboratory had just obtained its licence in September 2020.
The group declared its fourth interim dividend of S$0.01 per share, bringing FY2021’s total dividend to S$0.04.
At the last traded share price of S$0.525, Q & M Dental’s shares were offering a trailing dividend yield of 7.6%.
Dr Ng Chin Siau, founder and CEO of the group, has detailed four strategic pillars of growth for Q & M Dental.
The first is to expand its network of dental clinics, with a plan to open at least 30 per year in Singapore and Malaysia over the next 10 years.
The second pillar is the use of medical technology to deliver better patient care.
The third is to expand its clinical testing laboratory business to test for COVID-19 and other diseases, while the last pillar involves investments in medical and healthcare businesses.
IHH Healthcare Berhad (SGX: Q0F) (KLSE: 5225)
IHH is an integrated healthcare provider with a portfolio of hospital brands such as Acibadem, Mount Elizabeth, Gleneagles, Fortis, and Parkway that offer a comprehensive range of healthcare services.
The group is present in 10 countries and employs a total of 65,000 staff.
IHH delivered a stellar set of earnings for FY2021, with revenue climbing 28% year on year to RM 17.1 billion as lockdowns eased in the countries where the group operates.
Net profit soared more than six-fold year on year from RM 288.9 million to RM 1.86 billion.
The group is busy expanding its portfolio of hospitals in various countries.
In Turkey, a 180-bed hospital, Acibadem Atasehir Hospital, is expected to open by the third quarter of this year (3Q2022).
In the same quarter, the 450-bed Parkway Shanghai Hospital is also slated to begin operations.
Meanwhile, IHH is constructing a one-stop multi-disciplinary medical centre in Woodleigh Mall in Singapore that will open by 2023.
Last month, IHH also confirmed that it was bidding for Ramsay Health Care Limited (ASX: RHC), an Australian healthcare provider with a global network of clinics spanning 10 countries.
Healthway Medical Corporation (SGX: 5NG)
Healthway Medical has a network of more than 100 clinics and medical centres in Singapore.
The group offers comprehensive healthcare services including family medicine, health screening, specialist services, dental services, and allied healthcare services.
Healthway reported a good set of earnings for FY2021, with revenue jumping 43.6% year on year to S$139.9 million.
The stronger showing was due to higher patient volumes for 2021 compared to the prior year, along with additional revenue flowing in from vaccinations, COVID-19 tests and serology testing projects.
Net profit more than tripled year on year from S$3.2 million to S$10.8 million.
The group continues to grow its network of clinics with an investment in a primary healthcare chain operating nine clinics mainly in the central business district.
The medical clinic chain is also expanding its staff strength by hiring more specialist doctors from the paediatric and orthopaedic specialities, intending to move into new sectors that the group is not present in currently.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
