PCR waning, ART shining

  • PCR testing in Singapore is to be reserved for symptomatic Covid-19 patients and travellers requiring on-arrival and pre-departure tests.
  • Previously, PCR tests were required for ART-positive individuals (confirmatory) as well as patients exiting home quarantine.
  • Reduced demand for PCR tests could see FY22F/23F EPS dip by 7%/3% for Q&M. No change in our EPS estimates for now.

PCR testing to be reserved for symptomatic patients

● As announced by the Ministry of Health (MOH) on 9 Oct 2021, Covid-19 testing protocols have been streamlined for simplicity.
● The nation will be relying more heavily on antigen rapid tests (ART) while reserving usage of polymerase chain reaction tests (PCR) for symptomatic patients.
● Travellers flying to Singapore via vaccinated travel lanes (VTLs) will still need to take on-arrival and pre-departure PCR tests. At present, VTLs only exist with Germany and Brunei. Singapore is expanding VTLs to 9 other countries, with South Korea VTL starting from 15 Nov 2021 and the rest commencing on 19 Oct 2021.


New protocols to favour ART more; negative for PCR

● The new MOH protocols cover three scenarios: 1) symptomatic individuals who test ART-positive, 2) asymptomatic individuals who test ART-positive, 3) close contacts of a positive case. These three groups of individuals are required to take an initial ART to determine Covid-19 infection.
● Symptomatic individuals are expected to see a doctor to get an ART. PCR tests will be used at the discretion of doctors for patients displaying more severe symptoms.
● Asymptomatic individuals will not be required by law to undergo a PCR test.

● Previously, a confirmatory PCR test was needed for patients who tested ART-positive. Patients in home quarantine were also required to take a PCR test before exiting quarantine. These are now no longer required under the new protocols.


Dampener to Q&M’s testing revenue

● While PCR tests are expected to decrease in FY22/23F, w e still see resilient demand from the opening of borders and the emergence of new virus strains. Continued rostered routine testing (RRT) for workers should also contribute to PCR demand.
● We believe that the shift towards ART is to mainly reduce the strain on public healthcare resources.
● We understand that the group currently of fers ART testing at 6 of its outlets (as of 13 Aug 2021), according to the MOH. Growing ART testing volumes could help to support testing revenues.
● We are not changing our EPS estimates yet because increased Covid-19 cases could support PCR revenue from symptomatic and RRT testing. How ever, our initial assessment sees EPS declining by 7%/3% if testing capacity is reduced by c.50% in FY22F/23F.
● Potential catalysts: more tests than expected, quicker Aoxin turnaround. Downside risks include intensifying competitive pressure and lower-than-expected PCR demand.