Medical Suppliers See a Surge in Trading as Markets React to Variant News

• The STI has declined 3.1% over the past two sessions. Globally, Airline, Hospitality and Bank stocks were among the most adversely impacted by the reports of the Omicron variant and ensuing uncertainty on vaccine efficacy and containment measures. At the same time, globally, Pharmaceutical, Healthcare Services and Healthcare Products have been the most defensive sectors.
   
• In Singapore, Riverstone, Top Glove, Medtecs Int and UG Healthcare have averaged 48% gains over the past two sessions, with a surge in trading turnover. Today, the four stocks saw close to S$170 million in shares changing hands, more than doubling Friday’s S$77 million, and significantly higher than the combined average daily $20 million turnover for the 2021 year, prior to 26 Nov.
   
• Medtecs Int led the four stocks over the two sessions. The stock rallied from 3.7 cents at the end of 2019 to S$1.00 at the end of 2020, and had declined to 29.0 cents on 25 Nov, before rallying to 40.0 cents on 26 Nov, and closing at 0.50 cents on 29 Nov. On 22 Nov, Medtecs Int reported 9MFY21 revenue of US$115M, down from US$287M in 9MFY20, and up from US$50M in 9MFY19.
   
• Raffles Medical and Q&M Dental also averaged 4% gains over the past two sessions. Both companies have supported the Singapore Government’s COVID-19 initiatives, with Raffles Medical operating dedicated PCR centres while Q&M Dental’s Acumen Diagnostics focuses on the manufacture and distribution of COVID-19 diagnostic test kits, as well as COVID19 testing.

The uncertainty of the Omicron variant on vaccine efficacy and global containment measures has seen a sharp adjustment to the recent gains of stock sectors, industries and valuations since Thursday. In the Singapore stock market, the Straits Times Index (“STI”) has declined 3.1% from 3,221.52 on Thu 25 Nov, to 3,120.58 on Mon 29 Nov, while the Hang Seng Index has declined 3.6% and the FTSE ASEAN All-Share Index has declined 2.8%. This has seen the STI return to levels last traded on 11 October, with the year to date total return trimmed to 13.2%.

DBS Group Holdings, Oversea-Chinese Banking Corporation and United Overseas Bank have averaged a decline of 3.8% over the two sessions, with global banks declining 3.1%. During the two sessions, Singapore Airlines, CapitaLand Integrated Trust, Genting Singapore, ComfortDelGro Corporation and Thai Beverage PCL led the STI decliners, averaging 5.0% declines. Outside the STI, and among the 100 most actives for the year, Far East Hospitality Trust, CDL Hospitality Trust and Ascott Residence Trust averaged 6.0% declines over the two sessions. At the same time, the sharp decline in energy prices, with emerging variants a key downside risk, saw Rex International, Geo Energy Resources and RH Petrogas average 4.3% declines. These moves have followed the moves of global stocks that have seen Airlines, Hospitality and Bank stocks seeing the biggest declines since 25 Nov, while Pharmaceutical, Healthcare Services and Healthcare Products have been the most defensive.  

Likewise, among Singapore’s 100 most active stocks for 2021, six of the most defensive performers of the past two sessions represented the Healthcare Sector. As tabled below, Medtecs International, UG Healthcare Corporation, Top Glove Corporation Bhd and Riverstone Holdings comprised four of the five strongest most actively traded stocks over the past two sessions. Today, the four stocks saw close to S$170 million in shares changing hands, more than doubling Friday’s S$77 million, and significantly higher than the combined average daily $20 million turnover for the 2021 year, prior to 26 Nov, and their average daily combined turnover of S$40 million in 2020.

Source: SGX, Bloomberg, Refinitiv (Data as of 29 Nov, 5:15pm)

Prior to Friday, the four stocks had generated median declines of approximately 60% in the 2021 year through to Nov 25, following median total returns of 720% in 2020. Catalist-listed Medtecs International ended the 29 Nov session at 50.0 cents per share, up from 29.0 cents per share on Thu 25 Nov. In 2020, the share price rallied 3.7 cents at the end of 2019 to S$1.00 at the end of 2020. The company noted last week in a 3QFY21 (ended 30 Sep) Business Update, demand for personal protective equipment (“PPE”) had declined recently due to completion of stock-piling exercises by its customers in 2020 and subsequent inventory adjustments, and the stabilisation of the supply and prices of the PPE market globally. The last two years had seen its revenues for the first nine months of the year swing from US$50M in 9MFY19, to US$287M in 9MFY20, to US$115M in 9MFY21.

Top Glove Corporation Bhd is the largest medical supplier listed in Singapore by market value. The secondary listing is also the globe’s largest manufacturer of gloves and has reported steady growth with a compound annual growth rate of 27% for revenue and 36% for profit after tax over the past 20 years, and as the Chairman reiterated on 11 Nov, glove demand was already growing steadily pre pandemic at a rate of 10% per annum and is likely to stabilise at a higher level even after the pandemic recedes owing to elevated awareness and hygiene levels. While ranking outside the most traded 100 stocks this year, Aspen Group has also rallied 19.1% over the past two sessions. In addition to its Development of residential and commercial property business, Aspen Group has a healthcare Manufacturing of gloves segment, with its commercial production of gloves under its Phase 1(a) commencing on 10 May and its first shipment of gloves shipped out on 29 May.

Also among the five most defensive stocks for the past two sessions was Catalist-listed Totm Technologies. Formerly Yinda Infocom, the company has undergone a strategic rebranding following its acquisition of a 51% stake of Singapore based International Biometrics Pte Ltd, which is a Singapore-incorporated software company that provides integrated identity management platform solutions for mega-scale end-to-end projects. With Totm Technologies’ focus on Identity Management Solutions, especially in the space of Digital On-boarding and Digital ID, the company maintains in the post-COVID-19 scenario, the global digital identity solutions market size is projected to double from US$23 billion in 2021 to US$50 billion by 2026.

Raffles Medical Group and Q&M Dental also ranked among the most defensive stocks over the past two sessions. Raffles Medical Group noted in July that adapting to the ever-changing nature of the pandemic, it has expanded its operations beyond air-border screening and pre-event testing to include vaccination centres, pre-departure swabbing of cruise passengers, as well as operating dedicated polymerase chain reaction (“PCR”) testing centres to conduct tests for those exposed to new COVID-19 clusters as they emerge. Q&M Dental also reiterated in November, that in 2020, the Group expanded into the medical laboratories and research industry with the incorporation of Acumen Diagnostics Pte. Ltd. (“Acumen Diagnostics”). Acumen Diagnostics currently focuses on the manufacture, sale and distribution of COVID-19 diagnostic test kits, as well as COVID19 testing.

The 10 least performing stocks of the 100 most traded Singapore stocks in 2021, over the past two sessions are tabled below.  

 Source: SGX, Bloomberg, Refinitiv (Data as of 29 Nov, 5:15pm)

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Originally Posted on November 29, 2021 – Medical Suppliers See a Surge in Trading as Markets React to Variant News