Singapore healthcare companies face rising cost pressures

But long-term potential in tip-top shape.

According to OCBC Investment Research, cost pressures pose as the key risk for the Singapore healthcare sector as seen in their recently climbing operating expenses, mainly from staff and rental costs. Healthcare companies are seen to work double-time to pick up revenues to offset these expenses, and improve their operating performance. In the longer-term view though, the sector has rosy prospects due to its aggressive expansions.

Here's more from OCBC:

1QCY13 results roundup. Companies within the healthcare sector posted relatively decent results during the recently concluded 1QCY13 reporting period.

Under our coverage, Biosensors International Group’s (BIG) core earnings growth of 4.1% YoY beat our forecasts, while that of Raffles Medical Group (RMG) came in within our expectations (+16.0% YoY). BIG’s overall revenue was relatively flat (+0.7% YoY), as strong product revenue growth of 16.9% was offset by a 45.7% dip in licensing and royalties revenue.

Encouragingly though, BIG continued its market share gains as exemplified by the double-digit stent sales growth registered in its core EMEA and AsiaPacific markets.

For RMG, its 11.2% YoY topline increase was propelled by both volume and ASP growth. Likewise, IHH Healthcare Berhad [NON-RATED] delivered higher YoY inpatient admission volumes and revenue intensities for its Singapore and Malaysia operations. Its Turkish operations experienced a slight 0.5% YoY fall in average revenue per inpatient admission, although inpatient volumes grew 4.9%.

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