Year in review
The FTSE ST Health Care Index (FSTHC) has turned in a muted showing this year thus far, declining 7.4% YTD and underperforming the broader market. We believe this was caused by the drag from Biosensors International Group’s (BIG) weak share price performance, which carries a substantial weight in the index (prior to the listing of IHH). Nevertheless, we believe that the strong sell-off in BIG’s stock since Apr has been overdone. We expect the group to continue its market share gains, underpinned by its technologically superior drugeluting stent (DES) platform, which should mitigate the challenges in the DES industry. Meanwhile, the healthcare sector also saw the high profile IPOs of IHH Healthcare Berhad (IHH) and Religare Health Trust (RHT) in 2012. We opine that these listings have created additional limelight on the sector and also offer investors a proxy to the thriving regional healthcare scene.
Robust fundamentals to drive growth ahead
We are still sanguine on the growth prospects of the healthcare sector as we move into 2013, as robust industry fundamentals are structural and entrenched in nature. This implies that the underlying growth drivers such as a growing and fast-aging population, rising affluence, increasing incidence and morbidity of diseases and burgeoning medical tourism activities would likely persist in the long run.
Maintain OVERWEIGHT; BIG our top pick for 2013 We opine that the healthcare sector offers