When it comes to investing in stocks, we would all love the ability to predict future stock prices. While crystal balls don’t exist in real life, there are many factors that we could pay attention to in order to help us make better investments.
For those who prefer investing on their own, looking at the underlying business behind the stock ticker is crucial. This can help us differentiate high quality companies or those with good potential from the rest.
There are several ways we can go about determining the quality of the company – including looking at its market capitalisation, financial ratios, recent revenue and profitability, ownership structure, peer performance, economic landscape and many more things.
One other important factor that may boost a company’s earning potential is government policies in the country. We recently heard the National Day Rally 2018, and here are four companies we think may potentially benefit from the stance the government is taking.
# 1 ISOTeam Limited
Public housing has been a hot button issue in Singapore recently. Needless to say, our homes and its prices are core national topics that’s close to all of our hearts.
During the National Day Rally, Prime Minister (PM) Lee Hsien Loong announced the extension of the Home Improvement Programme (HIP), as well as a second round of upgrading works on flats once they reach the 60- to 70-year mark, dubbed HIP II. The extension of HIP will add close to 230,000 HDB flats to the programme, including in Pasir Ris, Yishun, Tampines and Jurong.
This also highlights the government’s intention to continuously add more flats into the HIP and HIP II programmes. This is in addition to other complementary national refurbishment and upgrading programmes such as its Main Upgrading Programme (MUP), Neighbourhood Renewal Programme (NRP), Lift Upgrading Programme (LUP), Hawker Upgrading Programme (HUP), Electrical Load Upgrading (ELU) and others.
One beneficiary of such programmes is ISOTeam (SGX: 5WF). Listed in 2013, ISOTeam is an established player in Singapore’s building maintenance and estate upgrading programmes. In its FY2018 results, it announced that it has completed 24 NRP projects to-date, 37 markets and food centres HUP and refurbishment and redecoration (R&R) works to-date, and is currently working on a single HIP project.
# 2 Raffles Medical Group
As a rapidly ageing society, the National Day Rally covered healthcare requirements of Singaporeans as well. PM Lee announced that CHAS, or the Community Health Assist Scheme, would be expanded to include all Singaporeans with chronic health conditions regardless of income.
Previously, CHAS was introduced as part of the Pioneer Generation Package in 2012, to help lower- and middle-income Singaporeans pay for outpatient medical expenses at general practitioner (GP) clinics.
In addition, PM Lee announced the upcoming Merdeka Generation Package, which will likely be similar to the Pioneer Generation package in helping with more outpatient subsidies, Medisave top-ups, premium subsidies for MediShield Life Insurance Scheme and severe disability payouts.
Raffles Medical Group (SGX: BSL) has over 80 clinics which are CHAS and Medisave approved. It operates GP clinics and dental clinics, and can refer its patients to its hospital.
# 3 Tiong Seng Holdings
PM Lee also announced that the government will continue to increase accessibility to public healthcare. This means upgrading and building more polyclinics for Singapore’s ageing population.
To this end, he announced that new polyclinic facilities will be built in Sembawang, Eunos, Kallang and Bukit Panjang by 2020, and Nee Soon Central and Tampines North by 2023.
Of course, construction companies will benefit from this commitment to building more facilities and continuously upgrading existing ones. One such construction firm is Tiong Seng Holdings (SGX: BFI), who coincidentally, recently bagged contracts to build a 10-storey polyclinic at Balestier Road and care facility in Serangoon Road worth nearly $48 million.
# 4 Great Eastern
Another area of Singapore’s economy that might see an uptick in performance is the insurance sector. The government’s focus on healthcare – building more polyclinics, expanding the CHAS subsidies and introducing the Merdeka Generation Package – will no doubt drive higher insurance utilisation. This is also supplemented by our universal healthcare insurance – MediShield Life.
This could mean higher premiums for insurance companies going forward. As Singapore continues to age and develop new treatments and more personalised care, healthcare costs is going to increase. While companies like Raffles Medical Group may benefit, insurance companies like Great Eastern (SGX: G07) may see a boost in its revenue as well.
Look For Themes When You Invest In Stocks
These are just some potential winners in the stock market in Singapore based on what PM Lee has announced. There are other ongoing themes we can keep a lookout for, such as the “internetisation” of things (IoT) globally as well as the introduction of higher Additional Buyer’s Stamp Duty (ABSD) in Singapore.
These provide opportunities as well as risks to certain parts of the markets and/ or companies. We need to be aware of how themes, introduced by shifting global trends or government policies can share the outlook of stocks.
Tell us on our Facebook page if you see any interesting companies that will benefit from National Day Rally 2018 or even other interesting themes developing in the broader markets.
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