SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

<ul><li>Of the actively traded stocks listed on SGX, Singapore Medical Group saw the biggest jump in volume in August compared to its three-month average volume. The stock also gained 91.4% in August and earlier in the month reported a turnaround net profit of S$0.8 million for 1H2016 compared to a net loss of S$0.1 million in 1H2015.</li></ul><ul><li>
Consumer Staples plays, Sheng Siong Group and Dairy Farm International Holdings were also amongst the 10 actively traded stocks that saw the biggest jump in August volume.…</li></ul>

Of the actively traded stocks listed on SGX, Singapore Medical Group saw the biggest jump in volume in August compared to its three-month average volume. The stock also gained 91.4% in August and earlier in the month reported a turnaround net profit of S$0.8 million for 1H2016 compared to a net loss of S$0.1 million in 1H2015.
Consumer Staples plays, Sheng Siong Group and Dairy Farm International Holdings were also amongst the 10 actively traded stocks that saw the biggest jump in August volume.…

10 Biggest Volume Jumpers in August Spanned Seven Sectors

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Equity Capital Markets

Guangdong Kanghua Healthcare / Equity Capital Markets

Guangdong Kanghua (GDKH) has one of the largest for-profit private hospital in China (Kanghua hospital) in terms of registered beds and third largest in terms of revenue, as at December 2015. In this article, we discuss the answers to the following questions:<ol><li>Falling utilisation was offset by rising average inpatient spend and rising hospital visits. Can this continue?</li><li>Its top two disciplines - O&amp;G and Cardiology have been showing good growth, but don't expect a spurt in birth rates from the easing of one-child policy.</li><li>Why is this deal for patient investors? </li><li>What are the other specific risks facing the company?</li><li>At what valuations should GDKH trade at?</li></ol>

Guangdong Kanghua (GDKH) has one of the largest for-profit private hospital in China (Kanghua hospital) in terms of registered beds and third largest in terms of revenue, as at December 2015. In this article, we discuss the answers to the following questions:Falling utilisation was offset by rising average inpatient spend and rising hospital visits.  Can this continue?Its top two disciplines - O&amp;G and Cardiology have been showing good growth, but don't expect a spurt in birth rates from the easing of one-child policy.Why is this deal for patient investors? What are the other specific risks facing the company?At what valuations should GDKH trade at?

Guangdong Kanghua IPO: Concentration Risk and More Track Record Needed

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Equity Bottom-Up

Thai mainstream hospital chains are all priced at over 35x PE each. On a relative basis, we believe market leader BDMS has the best relative value, but overall we would avoid this sector. For die-hard healthcare investors, we recommend picking niche players and related stocks, such as Mega Life Sciences or MEGA (a drug maker with 80% gross margin), <a href="https://www.smartkarma.com/entities/22925" target="_blank" data-smartkarma-citation="entities:22925">Business Alignment Public Company Limited (BIZ TB)</a>  (an "insanely cheap" cancer treatment stock that is popular with hospitals but unloved by investors), and <a href="https://www.smartkarma.com/entities/22924" target="_blank" data-smartkarma-citation="entities:22924">Ekachai Medical Care PCL (EKH TB)</a>  (a childcare center trading at 2.8x PE....seriously?)Inside this review, you'll find some interesting snippets about: 1) drugmakers who intentionally produce in high-cost environment; 2) profitable companies with high margins and good potential trading at ridiculous discounts in a traditionally expensive sector simply because they are not big enough to warrant coverage; and 3) why we would pick a 43x PE stock over a 37x one. Enjoy!

Thai mainstream hospital chains are all priced at over 35x PE each. On a relative basis, we believe market leader BDMS has the best relative value, but overall we would avoid this sector. For die-hard healthcare investors, we recommend picking niche players and related stocks, such as Mega Life Sciences or MEGA (a drug maker with 80% gross margin), Business Alignment Public Company Limited (BIZ TB)  (an "insanely cheap" cancer treatment stock that is popular with hospitals but unloved by investors), and Ekachai Medical Care PCL (EKH TB)  (a childcare center trading at 2.8x PE....seriously?)Inside this review, you'll find some interesting snippets about: 1) drugmakers who intentionally produce in high-cost environment; 2) profitable companies with high margins and good potential trading at ridiculous discounts in a traditionally expensive sector simply because they are not big enough to warrant coverage; and 3) why we would pick a 43x PE stock over a 37x one. Enjoy!

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Margin pressure continues through Q2 -- Q2 EPS were S0.95 cents (+2%) on a 19.8% increase in revenue (S$118.9 million) as expansion programs and the International SOS acquisition drag on margins. Most expense categories increased ahead of revenue (supplies +22%; staff +24%; lease +39%; other +34%), resulting in 4% growth in operating profit. Net income was essentially flat at S$16.1 million with tax expense +20% (20% tax rate). EBITDA came in at S$24.3 million (+7%). The earnings announcement is…

Margin pressure continues through Q2 -- Q2 EPS were S0.95 cents (+2%) on a 19.8% increase in revenue (S$118.9 million) as expansion programs and the International SOS acquisition drag on margins. Most expense categories increased ahead of revenue (supplies +22%; staff +24%; lease +39%; other +34%), resulting in 4% growth in operating profit. Net income was essentially flat at S$16.1 million with tax expense +20% (20% tax rate). EBITDA came in at S$24.3 million (+7%). The earnings announcement is…

Bangkok Dusit Medical Services / Equity Bottom-Up

BDMS' Q4 results were encouraging with revenue +12%, EBITDA +14%, and net income (excluding non-recurring items +21%. Revenue from existing hospitals was +7% while new hospitals (open less than two years) added 4% (other operations added 1%.)EBITDA was +14% (EBITDA margin was 22.4%, +40bps) with operating expenses +11%. Importantly, depreciation expense decelerated markedly to +8% as the company starts to lap the impact of the opening of five hospitals from early 2015. Capacity utilization…

BDMS' Q4 results were encouraging with revenue +12%, EBITDA +14%, and net income (excluding non-recurring items +21%. Revenue from existing hospitals was +7% while new hospitals (open less than two years) added 4% (other operations added 1%.)EBITDA was +14% (EBITDA margin was 22.4%, +40bps) with operating expenses +11%. Importantly, depreciation expense decelerated markedly to +8% as the company starts to lap the impact of the opening of five hospitals from early 2015. Capacity utilization…

Thailand

Bumrungrad Hospital Public Company Limited, through its subsidiaries,  owns and operates the Bumrungrad Hospital. Located in Bangkok, the Hospital has capacity of international standard medical care with 554 beds for inpatients and approximately 125 clinic examination suites that can serve up to 3,000 outpatients daily.

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Bumrungrad Hospital Pub Co (BH TB)

10 Biggest Volume Jumpers in August Spanned Seven Sectors

Of the actively traded stocks listed on SGX, Singapore Medical Group saw the biggest jump in volume in August compared to its three-month average...

Singapore Exchange Ltd (SGX)

Guangdong Kanghua IPO: Concentration Risk and More Track Record Needed

Guangdong Kanghua (GDKH) has one of the largest for-profit private hospital in China (Kanghua hospital) in terms of registered beds and third...

Valerie Law, CFA

Thai Healthcare: A Sector of Extremes

Thai mainstream hospital chains are all priced at over 35x PE each. On a relative basis, we believe market leader BDMS has the best relative value,...

Athaporn Arayasantiparb, CFA

Expansion Plans Continuing to Pinch

Margin pressure continues through Q2 -- Q2 EPS were S0.95 cents (+2%) on a 19.8% increase in revenue (S$118.9 million) as expansion programs and...

Kemp Dolliver, CFA

Digesting the New Beds

BDMS' Q4 results were encouraging with revenue +12%, EBITDA +14%, and net income (excluding non-recurring items +21%. Revenue from existing...

Kemp Dolliver, CFA

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