#2 Raffles Medical
Raffles Medical Group (RMG) is an integrated private healthcare provider in the Asian region, involved in various types of tertiary medical services. Its flagship is the Raffles Hospital located in Singapore.
RMG does have presence in other countries such as China, Japan, Vietnam and Cambodia, but most of its revenue is still derived from Singapore at 91.2% of total revenue.
RMG's business is still mostly derived from general healthcare services at about 54.3% of revenue, while its more sophisticated hospital services which include surgeries account for 41.0%.
RMG wasn't really affected by the pandemic considering its status as a healthcare provider. Revenue grew by almost 1.5 times to SGD723.8 million in 2021 from SGD522.0 million in 2019 on higher patient visits.
Meanwhile, profits grew by 29.5% in 2021, while its operating cash flow also grew by a healthy 19.3%. Its profit margins have been relatively stable at 11.6%, but is still slightly lower than its historical average of 16.4%.
RMG could be worth looking at for the following reasons:
- Strong position in the Singapore healthcare market.
- Resilient to recessions.
- Consistent dividend policy.
Currently, RMG is trading at a P/E ratio of 24.3 times, with a dividend yield of 1.3%. Most analysts have RMG at a BUY call, with the highest target price of SGD1.64. This implies an upside of 18.8%.
#3 Q&M Dental Group
Q&M Dental Group (Q&M) is a dental healthcare services provider, involved in both primary and specialist dental services. It has presence in both Singapore and Malaysia, with over 100 clinics in both countries.
Its primary healthcare services still account for the bulk of Q&M revenue at about 77.9%, while medical laboratory, dental equipment and supplies distribution account for the remaining.
Q&M almost doubled its revenue from SGD128 million in 2019 to SGD205.6 million in 2021, as it expands its presence in both Singapore and Malaysia. Likewise, profits more than doubled from SGD18.2 million to SGD39.4 million over the same period.
Its profit margins currently of 19.1% is the highest it has ever been since 2016 of 21.5%. Meanwhile, Q&M has a high return on asset of 14.3% currently compared to an average of 7.7% from 2017 to 2020.
Q&M is worth taking a look at for the following factors:
- It is currently the biggest private dental service provider in Singapore.
- Strong financial performance during the pandemic.
- High operational efficiency with returns on asset.
At the time of writing, Q&M is trading at a P/E ratio of 14.1 times, with a high dividend yield of 10.2%. Q&M mostly has a BUY call from analysts with a target share price range of SGD0.40 to SGD0.60, implying a potential upside of 17.6% to 76.5%.
#4 Thomson Medical Group
Thomson Medical Group (TMG) is a healthcare provider based in Singapore, providing healthcare services mainly to women and children.
Its list of services include diagnostic imaging, health screening, gynecologic oncology, dentistry, dermatology, traditional Chinese medicine, musculoskeletal and sports medicine, and medical aesthetics.
Singapore remains the bread and butter of TMG, contributing 76.3% of total revenue, with the remaining going to Malaysia. Meanwhile, in 2022, its specialist services revenue contribution of 51.2% surpassed its hospital services revenue.
TMG continues to register solid financial growth, with revenue increasing from SGD229.8 million in 2019 to SGD333.8 million in 2022 - its highest revenue recorded in history. Likewise, it also recorded its highest profit of SGD58.6 million in 2022.
As there were some unusual expenses, it is apt to look instead at its operating cash flow. It recorded a consistent positive operating cash flow since the 1H 2020, where it now has the highest operating cash flow of SGD51.2 million in 1H 2022.
It could be a good investment to accumulate for the following factors:
- Niche in providing women and children healthcare services.
- Strongest financial performance currently in about 10 years
TMG is currently trading at a P/E ratio of 38.9 times, a hefty valuation but it goes to show that investors are optimistic on TMG's prospects moving forward. Its dividend yield is at 1.5%.