SINGAPORE (Jan 4): RHB Research has reiterated its “overweight” rating on the healthcare sector, as the ageing population trend continues.

In 2016, the proportion of the population above 65 years of age had increased to 13%, from 9% in 2010. Over the same period, life expectancy increased from 81.5 to 83.1, and the number of incident cancer cases also rose 17.4% to 13,416 from 2010 to 2014.

RHB analysts Juliana Cai and Jarick Seet noted that healthcare providers would benefit from a sustained growth in healthcare expenditure as increased numbers of local residents choose to adopt private integrated shield plans.

In fact, the number of policyholders for such plans has risen 6% over the period from 2006 to 2015, enabling more people to access private medical services when necessary.

Meanwhile, longer wait times at public hospitals and the growing average household income would also spur more to opt for private medical alternatives.

As such, Cai and Seet recommend buying Raffles Medical Group and Singapore Medical Group for their strong pipeline growth in 2017.

The pair point out that RMG is set to see a surge in rental income as the new tenants for its Raffles Holland Village Medical Centre move in by early-2017, while its Raffles Hospital extension will improve patient load when it is completed by 2HFY17.

SMG is also expected to grow as it continues to acquire new targets to “consolidate the specialist medical private fields in Singapore”.

Shares in RMG and SMG are trading  at $1.44 and 44 cents on Wednesday.