Singapore Tech & Healthcare Stocks Recently Sought by Institutions

Technology and Healthcare stocks have continued to lead local and global stocks since the STI high on 9 June. Technology stocks ability to expand products and services into 2H20 has been a key industry driver, with the Healthcare Sector more driven by producers and distributors of medical supplies and equipment. The five technology stocks with the highest net institutional inflows (proportionate to market value) from 9 June to 21 August, included UMS Holdings, AEM Holdings, Venture Corporation, Broadway Industrial Group and Synagie Corporation, with the five stocks averaging 29% total returns. Three healthcare stocks that were amongst those with the highest net institutional inflows (proportionate to market value) from 9 June to 21 August, included Clearbridge Health, iX Biopharma and Medtecs International Corporation, with the trio seeing a 36% median total return. Globally, Technology stocks and Healthcare stocks have continued to lead stock markets over the past 11 weeks. Since the Straits Tines Index (“STI”) posted a high of 2,839 on 9 June, it has generated an 8.1% decline in total return, with the FTSE ASEAN All-Share Index declining 4.6%. This has seen the iEdge SG All Healthcare Index rally close to 50% over the 11 weeks. The trio of Venture Corporation, AEM Holdings and Keppel DC REIT together almost moved in unison, averaging 28% returns and outpacing the iEdge-Factset Global Internet Index and iEdge-Factset Global E-Commerce Index which both generated gains close to 20%.Industry Demand Transcending Lockdowns Ability for technology stocks to continue expanding products and services into 2H20 has been a key driver of the Sector, while the gains of the Healthcare Sector were more driven by producers and distributors of medical supplies and equipments. For instance: On 7 Aug, Venture Corporation stated that its steady recovery seen in 2QFY20 (ending 30 June) was expected to continue into the second half of this year and that its Research & Development labs “have plans to subsequently release a number of newly developed products into manufacturing commencing early 2021”. On 6 August, Riverstone Holdings Executive Chairman and CEO Wong Teek Son cited the Malaysian Rubber Glove Manufacturers Association projection of robust 11% growth in rubber glove demand, reaching approximately 330 billion pieces in 20201 and that in light of the industry outlook, its “capacity expansion plans for the coming years will serve to meet this growing demand for gloves around the world”. Technology Stocks Recipient to Highest Net Institutional Inflows Proportionate to Market Cap Since 9 June Singapore Technology stocks that have seen the highest net institutional inflows (proportionate to current market capitalisation) since the STI high of 2,839 was formed on 9 June, through to 21 August, included UMS Holdings, AEM Holdings, Venture Corporation, Broadway Industrial Group and Synagie Corporation. The relative size of the inflow to the current market capitalisation of the stock is illustrated below.As tabled below, the five stocks all performed relatively strongly over the 11-week period, with just the one stock Broadway Industrial Group generating a marginal decline. Name Code Mkt Cap (S$M) Average Daily Turnover (S$M) Net Insti Inflow YTD (S$M) Total Return 31 Dec 19 – 23 Mar 20 Total Return 23 Mar 20 - 9 June 20 Total Return 9 June 20 - 21 Aug 20 Net Insti Flow 10 June 20 - 21 Aug 20 Total Return YTD UMS HOLDINGS 558 539 7.5 12.2 -45.1% 59.3% 16.5% 20.1 1.8% AEM HOLDINGS AWX 1,112 21.2 54.7 -29.2% 118.2% 31.1% 28.7 102.5% VENTURE CORP V03 5,816 24.9 236.5 -22.7% 28.2% 29.2% 140.9 27.9% BROADWAY INDUSTRIAL GRP B69 52 1.5 1.2 -50.4% 69.7% -0.9% 1.2 -16.5% SYNAGIE CORP V2Y 64 1.9 3.1 -35.7% 49.4% 69.4% 1.1 62.8% Source: SGX, Bloomberg, Refinitiv (Data as of 21 August 2020) Broadway Industrial Group and Synagie Corporation Reported Turnarounds in 1HFY20 On 6 August, Broadway Industrial Group reported a net profit after tax of S$6.8 million for its 1HFY20 (ended 30 June) as compared to a net loss after tax of S$7.8 million in 1HFY19, representing a significant turnaround of the financial performance of the Group despite the impact of the COVID-19 pandemic (click here for more). This was mainly attributed to higher average selling prices from product mix shift towards higher value enterprise server class (or nearline) products, with the volume of nearline products growing by 50% year-on-year, to over 40% of the total volume sold.On 13 August, Synagie Corporation reported its 1HFY20 (ended 30 June) profit increased by S$7.8 million, from a loss of S$3.7 million in 1HFY19 to a profit of S$4.1 million in 1HFY20, mainly due to the increase in e-Commerce activity as a result of the COVID-19 situation and stay at home measures. Note the Group announced the proposed disposal of its e-Commerce business on 5 August 2020 which includes its e-Commerce enabler and logistics business (including the technology and business solutions), for more details click here. The aggregate consideration for the sale of the business is S$61.7 million, and it will be sold to a consortium of investors including the founders of the Group. The company noted that the surge in e-Commerce revenue in 1HFY20 was mainly due to the one-off increase in demand for COVID-19 related products since the pandemic started and Synagie noted it expected e-Commerce revenue to normalise over the next few months. The proposed disposal will enable the Group to return capital to shareholders and focus on its Insurtech business.Healthcare Stocks Recipient to Highest Net Institutional Inflows Proportionate to Market Cap Since 9 June Singapore Healthcare stocks that were amongst those with the highest net institutional inflows (proportionate to current market capitalisation) since the STI high of 2,839 was formed on 9 June through to 21 August included Clearbridge Health, IX Biopharma and Medtecs International Corp. Note Asiamedic and Cordlife Group also featured among the five healthcare stocks with highest proportionate inflows, however both stocks have averaged daily turnover of less than S$1 million in the 2020 year to 21 August. The relative size of the inflow to the current market capitalisation of the stock is illustrated below.As tabled below, the three healthcare stocks all performed comparatively strongly over the 11 week period, with a median total return of 35.6%. Name Code Mkt Cap (S$M) Average Daily Turnover (S$M) Net Insti Inflow YTD (S$M) Total Return 31 Dec 19 – 23 Mar 20 Total Return 23 Mar 20- 9 June 20 Total Return 9 June 20 - 21 Aug 20 Net Insti Flow 10 June 20 - 21 Aug 20 Total Return YTD CLEARBRIDGE HEALTH 1H3 110 3 -1.3 -26.8% 75.2% 2.3% 1.00 31.2% IX BIOPHARMA 42C 198 2 -0.3 -35.6% 79.3% 17.3% 1.57 35.6% MEDTECS INTERNATIONAL CORP 546 1,016 19 -2.3 83.8% 245.6% 687.2% 4.68 4900.0% Source: SGX, Bloomberg, Refinitiv (Data as of 21 August 2020) On 11 August, Medtecs International Corporation reported net profit after tax increased from US$386,000 in 1HFY19 (ending 30 June) to US$38,893,000 in 1HFY20 due to higher sales, higher gross profit margins and foreign exchange gains. For more details on the stock’s impact on the iEdge SG All Healthcare Index this year click here.Clearbridge Health Reported a Turnaround in 1HFY20 On 14 August, Catalist-listed Clearbridge Health reported its 1HFY20 (ending 30 June) financial results saw a significant turnaround, with net profit of S$3.77 million, compared to a net loss of S$1.77 million in 1HFY19 (for more details click here). In 1HFY20, the Group’s revenue increased substantially by 213.1% to S$21.46 million from S$6.85 million for 1HFY19, as the Group leveraged on its regional healthcare networks and distribution platform to harness the medical and healthcare opportunities in the region during the period, via its medical centres and clinics business unit and distribution network presence. Revenue from the Group’s medical centres and clinics business unit surged by 601.7% to S$12.69 million in 1HFY20, from S$1.81 million in 1HFY19, driven mainly by the sales of medical supplies, provision of COVID-19 testing related services in the Philippines and distribution of COVID-19 Antibody Test Kits.Catalist-listed iX Biopharma is expected to report is FY20 results this week. iX Biopharma is a specialty pharmaceutical and nutraceutical company and recently announced a placement of 44,491,299 new ordinary shares in the capital of the company at S$0.23 per Subscription Share to support the future growth of the Group – the relevant EGM is scheduled for 4 September. With the announcement of the placement, management noted that as iX Biopharma transitions from being focused on research and development to commercialisation, the company intends to strengthen its balance sheet to allow it to commercialise a number of products across different markets. The company has also made multiple announcements this year on product and market developments – click here for more.