| (Repeats Aug 2 story with no changes to text) * Health sector index up as much as 23.4 pct since May * Shares have risen between 20 pct to 50 pct year to date * Strong fundamentals with ageing population, regional demand (For more Reuters buysells click [BUYSELL/]) By Eveline Danubrata SINGAPORE, Aug 2 (Reuters) - Singapore's healthcare sector, up more than a quarter this year, may be running ahead of fundamentals, boosted by a bidding war for Asia's biggest listed hospital operator Parkway Holdings <PARM.SI> The Singapore stock exchange's health sector index <.FTFSTAS4000> has jumped as much as 23.4 percent in a rally which started at the end of May when Malaysia's Khazanah announced its successful bid for Parkway after months of wrangling with Fortis Healthcare <FOHE.BO>. [ID:nSGE66P00J] But are Singapore healthcare stocks still a good buy? <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For StarMine comparisons click: http://r.reuters.com/was72n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> GOOD BUYS Singapore's healthcare firms have strong fundamentals due to the city-state's ageing population, thriving medical tourism from the region and the roaring recovery of the local economy -- set to grow as much as 15 percent this year. [ID:nSGE66C0GX] "Healthcare provision is unusual in that it is both a defensive and a growth industry, so well-managed companies in the sector can be good investments," said Peter Elston, a strategist at Aberdeen Asset Management Asia, which oversees more than $68.5 billion and holds shares in Raffles Medical Group <RAFG.SI>. "Healthcare is defensive because people always need healthcare, so demand is not cyclical. And it is a growth industry because as people get richer they spend more on healthcare," he added. Raffles Medical, which posted a 20 percent rise in second-quarter profit last week, is expanding its flagship hospital in Singapore and has opened a medical centre in Shanghai. Healthway Medical Corp <HEMC.SI> is on track to open six medical centres in Shanghai and is eyeing other cities. "The healthcare firms are generally trading at higher valuations," said Lynette Tan, an analyst at DMG & Partners. She said these valuations had not been seen for a long time "but as long as the companies can still perform and their strategies come through, they might not be that expensive at all." Tan has buy ratings on Raffles Medical, Healthway Medical and Thomson Medical. TOO RICH FOR OTHERS "We believe growth in hospital and healthcare services is starting to show a deceleration," said James Tan, an analyst at Deutsche Bank. For the year to date, shares of Parkway and Raffles Medical have surged around 35 percent. Thomson Medical Centre <THOM.SI> has risen by about 21 percent and Healthway has gained more than 50 percent, outperforming the benchmark Straits Times Index's <.FTSTI> 3 percent. Tan has a "hold" rating on Raffles Medical. He said the stock is trading above its fair value and close to its long-term average of 23.6 times. The bank's revised target price of S$1.58 implies 22.3 times Raffles Medical's price-earnings ratio for its 2010 financial year. Lau Seu Yee, a Standard and Poor's analyst, warned about the threat from a possible slowdown in the United States and Europe economies and also of competition from neighbouring countries. "There is also competition (in the healthcare sector) from lower-cost places like Johor Bahru in Malaysia, Thailand and India," Lau said. For Parkway, analysts are calling for investors to reinvest proceeds from the general offer into other healthcare firms, given their estimated price-to-earnings multiple of 31 times 2010 earnings for the firm. ($1=1.362 Singapore Dollar) (Editing by Raju Gopalakrishnan and Valerie Lee) ((eveline.danubrata@thomsonreuters.com; +65 6403 5669; Reuters Messaging: (eveline.danubrata.reuters.com@reuters.net) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.co Keywords: BUYSELL/SINGAPOREHEALTH | 
