Hot stocks: Healthcare-related plays back in vogue, supermarket operators see strong interest, Companies & Markets

Mon, Feb 10, 2020 – 3:49 PM

INTEREST in Singapore-listed healthcare-related plays may have cooled last week, but with renewed concerns over the fast-spreading novel coronavirus, punters returned to place their bets on these counters – billed as beneficiaries of the outbreak. A local supermarket operator has also joined the fray.

On Friday after market close, Singapore authorities raised their risk assessment of the novel coronavirus from Yellow to Orange, with cases where the authorities are unable to determine the source of infection. The Orange alert level means that the outbreak is deemed to have moderate to high public health impact.

Medtecs International, a recent favourite of contra traders, commenced its second red-hot run of the year. As at 3pm on Monday, the manufacturer and distributor of medical consumables advanced 1.6 Singapore cents or 15.5 per cent to 11.9 cents with 288.6 million shares changing hands. That said, the shares are still some way off from the Jan 29 closing of 19.6 cents.

Integrated healthcare company Clearbridge Health gained 1.9 Singapore cents or 13.4 per cent to 16.1 cents. Tayrona Financial’s director of research Liu Jinshu told The Business Times: “Traders could be getting optimistic about this stock as it owns clinical laboratories in the region and could be a beneficiary of higher demand for laboratory testing of viruses and other illnesses.”

Meanwhile, Healthway International added 0.2 Singapore cent or 6.3 per cent to 3.4 cents.

The local market’s glove makers also resumed their climb. Riverstone Holdings, which generates the majority of its revenue from making rubber gloves, advanced S$0.06 or 5.7 per cent to S$1.12. Top Glove, one of the largest glove makers globally, added S$0.02 or 1 per cent to S$1.95. UG Healthcare jumped $0.04 or 16 per cent to S$0.29.

In previous epidemics, glove makers have seen sizeable increases in topline. Using Top Glove as an example, Citi Research analyst Megat Fais wrote in a recent report that the company’s revenue more than doubled during 2003’s Sars outbreak while it increased 13 per cent during 2012’s MERS (Middle East respiratory syndrome) outbreak.

Traders are also picking up Singapore-listed supermarket operators after the risk assessment for the novel coronavirus outbreak was raised to the same level as it was during the Sars (severe acute respiratory syndrome) epidemic in 2003, triggering panic buying of essential items at supermarkets in the city-state. 

Shares in Singapore-focused supermarket operator Sheng Siong, already favoured as a defensive play by analysts, was S$0.05 or 4.1 per cent higher at S$1.28. Its earning growth for 2020 will be driven by its new store openings of the past year.

Jardine-owned Dairy Farm International, which operates Cold Storage, Market Place and Giant Hypermarket outlets in Singapore, was trading higher in the earlier session before dipping to US$5.34, down US$0.07 or 1.3 per cent.

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