Healthcare Sector in New Zealand with Three Large Health Care Stocks – FPH, EBO, SUM

  • Apr 26, 2020 NZST
  • Team Kalkine
Healthcare Sector in New Zealand with Three Large Health Care Stocks – FPH, EBO, SUM


New Zealand Healthcare is considered among the best in the world. Generally, all of the hospital treatment, except few, is free for the ones who are eligible for the health care services. However, non-residents may have to pay for some of the services.

Notably, if one is not eligible for health care services, then it is recommended that they should take travel medical insurance policy.

There are more than 3,500 doctors (GPs) in New Zealand with a presence in almost all the cities, towns, and suburbs. Residents can access Healthpoint website, that lists registered GPs by the area.

In case of Emergency, one can access the after-hours service that GP practices offer, which are at higher prices with no subsidies. In-fact, urgent medical needs can be catered to by dialing 111.

Regarding medical payments, most costs of injuries from accidents are covered by ‘Accident Compensation Corporation’, which covers everybody in NZ including non-residents and visitors. To make the claim for ACC cover, help is also provided by doctors or health providers. The Ministry of Health has several programmes which help in preventing illness. Notably, programmes range from help with addictions such as gambling, alcohol or smoking to immunisation programmes as well as advice about keeping active.

Health Care Challenges:

New Zealand geographically is situated far away from most of the countries. However, with the inclusion of technology in health care along with fast internet speed has addressed the long-distant concern. Other important challenges include aging population which require better health and social services; long-term health conditions such as heart disease, diabetes, depression, dementia, and musculo-skeletal conditions which are growing; new infections and antibiotic resistance are also emerging; and climate change also plays a role for the health of people. However, another key challenge is that the global workforce is highly mobile.

Even though there are challenges, it can be said that there are opportunities as well. The sector could benefit from technology advancements and related infrastructure like broadband.

Projected Government Health Spending as a percentage of GDP (Source: Ministry of Health)

Recent Updates:

In light of the Covid-19 outbreak, the NZ government has placed strict social distancing and self-isolation guidelines and has put restrictions on travel (both domestic and international). NZ earlier witnessed a measles outbreak whose symptoms included fever, cough, runny nose, etc. To cater to this concern, the NZ government asked the authorities to look at the evidence of ‘measles vaccination’ produced by travelers from some Pacific Island countries. These countries were American Samoa, the Republic of Marshall Islands, Tokelau, and the Solomon Islands.

New Zealand Health Care Index: 

The impact of COVID-19 has been witnessed across sectors and industries. Also, the global markets have been negatively impacted by the outbreak of COVID-19. Several stimulus packages have been announced with the view to revive the global economy. When the global growth comes into question, the stock markets are generally impacted. However, in the current scenario, healthcare sector can be considered as the sector which has managed to limit the downfall. As can be seen in the below chart, in the past 3 months, S&P/NZX50 has witnessed a fall of 12.28% while, during the same time span, S&P/NZX All Healthcare (Sector) has witnessed a marginal fall of 2.78%. Given the potential, investors seem to be looking at healthcare sector in the current market scenario.

S&P/NZX50 vs S&P/NZX All Healthcare (Sector) (Source: Thomson Reuters)

We will now have a look at the leading healthcare sector companies like Fisher & Paykel Healthcare Corporation Limited (NZX: FPH), EBOS Group Limited (NZX: EBO), and Summerset Group Holdings Limited (NZX: SUM).

Comparative Chart (Source: Thomson Reuters)  

Fisher & Paykel Healthcare Corporation Limited 

Fisher & Paykel Healthcare Corporation Limited (NZX: FPH) is the global leader when it comes to medical devices and systems. These are used towards respiratory care and acute care, and in treatment of the obstructive sleep apnea. Its market capitalisation, as on April 24, 2020, stood at ~$16.09 billion. FPH’s share ended at $28.000 on April 24, 2020. Its price to earnings multiple stood at 68.070x, while its earnings per share stood at $0.406. Its gross dividend yield was 1.281%. 

Recently, Fisher & Paykel Healthcare Corporation Limited advised that it has been classified as essential service and, as a result, it will continue operations in Auckland facilities. Notably, the company has ramped up its manufacturing output and this is expected to continue under Level 4 alert status. 

EBOS Group Limited (NZX: EBO)  

EBOS Group Limited (NZX: EBO) happens to be diversified and leading company in Australasia. It is engaged in marketing, wholesaling and distributing of healthcare, medical and pharmaceutical products. It has a market capitalisation amounting to around $3.71 billion as of 24th April 2020. EBO’s share ended at $22.760 on April 24, 2020. Its P/E multiple stood at 23.060x, while its earnings per share stood at $0.998. Its gross dividend yield was 3.554%.

The company has recently advised the market participants that, since 1H FY 2020 results, it has witnessed positive momentum throughout its businesses through to the end of Q3 ended March 31, 2020. The company’s prudent capital management along with the acquisition strategy over several years places it in the robust financial position. 

Summerset Group Holdings Limited 

Summerset Group Holdings Limited (NZX: SUM) is 3rd largest operator as well as 2nd largest developer of the retirement villages and aged care facilities in NZ. The market capitalisation of the company stood at ~$1.42 billion on 24th April 2020. SUM’s share closed at $6.240 on April 24, 2020. Its P/E multiple stood at 8.140x while its earnings per share stood at $0.775. Its gross dividend yield was 2.235%.

SUM, in a recent release dated March 30, 2020, has mentioned that its aged care as well as retirement village operations are now deemed as essential service. SUM closed and secured all Summerset construction sites for the period of lockdown. As per the release, the restart plans are in place for each site in order to allow construction to commence again at an appropriate point.


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