Healthcare: Maybank-KE notes that despite the resilient earnings of Singapore healthcare stocks, stock prices have performed weakly in line with the market, and in some cases, from institutional investors paring stakes (IHH, Raffles Med)
Maybank-KE opines that the decoupling of price vs. fundamentals could present buying opportunities. Top picks are Raffles Med, ISEC and Q&M. Meanwhile, Cordlife is downgraded to Hold since it has rallied to $1.56 (TP $1.72), which already takes into account shareholding changes that could lead to a privatisation or other forms of corporate developments.
Catalysts for healthcare stocks:
-ISEC (TP $0.40): Down 57% from 52-week high, it is in the early stages of its M&A spree and the cheapest PE among peers (14.8x FY16e P/E)
-Q&M (TP $0.97): Down 31% from its 52-week high, offers 60% EPS growth for FY16, supported by profit guarantees.
-Raffles Med (TP $5.22: Down 21% from its 52-week high, is aggressively expanding in China, with the help of its execution track record.
Risks are poor execution or M&A delays, potentially caused by Chinese regulations
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