Universal Medical Financial & Technical Advisory Services Company Limited (HKG:2666), a CN¥10.98b small-cap, operates in the healthcare industry, which faces key trends such as rising demand fuelled by an aging population and the growing prevalence of chronic diseases. Furthermore, the challenges facing the healthcare providers in particular, are complex and interrelated. A focus towards more collaborative and data-driven care models, which address behavioural and physical health of chronic illness or aging patients, may help improve patient outcomes and lowered costs. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 21.05% in the upcoming year , and a whopping growth of 51.48% over the next couple of years. However this rate still came in below the growth rate of the Hong Kong stock market as a whole. An interesting question to explore is whether we can we benefit from entering into the healthcare sector right now. In this article, I’ll take you through the sector growth expectations, and also determine whether Universal Medical Financial & Technical Advisory Services is a laggard or leader relative to its healthcare sector peers.
What’s the catalyst for Universal Medical Financial & Technical Advisory Services’s sector growth?
Providers that are finding it difficult to gain further cost and operational efficiencies after picking the low-hanging fruit are beginning to turn their attention to more transformative initiatives to bend the cost curve. In the past year, the industry delivered growth of 8.09%, though still underperforming the wider Hong Kong stock market. Universal Medical Financial & Technical Advisory Services leads the pack with its impressive earnings growth of 31.68% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 20.52% over the next couple of years.
Is Universal Medical Financial & Technical Advisory Services and the sector relatively cheap?
The healthcare sector’s PE is currently hovering around 30.22x, higher than the rest of the Hong Kong stock market PE of 12.44x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 9.33% on equities compared to the market’s 9.56%. On the stock-level, Universal Medical Financial & Technical Advisory Services is trading at a lower PE ratio of 8.3x, making it cheaper than the average healthcare provider stock. In terms of returns, Universal Medical Financial & Technical Advisory Services generated 15.38% in the past year, which is 6.05% over the healthcare provider sector.
Universal Medical Financial & Technical Advisory Services’s future growth prospect aligns with that of the broader market and its PE is below its healthcare peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market hasn’t fully accounted for the growth, meaning now may be the right time to accumulate more of, or to enter into, the stock. However, before you make a decision on the stock, I suggest you look at Universal Medical Financial & Technical Advisory Services’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has 2666’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Universal Medical Financial & Technical Advisory Services? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.