SINGAPORE : Medical service provider Healthway Medical Corporation made a disappointing debut on the Singapore Exchange on Friday.

Its shares fell nearly 38 per cent from its subscription price to close at 22.5 cents on the first day of trade.

The IPO raised about S$49 million, and was 5.6 times oversubscribed.

Healthway Medical's shares did not look so healthy on their first trading day, even though the company's IPO is the largest on the Catalist board so far.

The counter opened weaker and headed downwards to end at 22.5 cents, down 37.5 per cent from its IPO price of 36 cents.

Dealers said there was some caution about the company's stock valuations and its plans to use most of the proceeds to repay debt. Still, analysts said this could be a temporary blip.

They said the medical sector, in general, remains fairly robust, holding out against the losses suffered by other sectors as a result of headline inflation and financial trouble overseas.

Analysts said this is because of the strong fundamentals behind the business, such as the constant need for medical services, as well as growing medical tourism.

Lynette Tan, a DMG & Partners analyst, said: "Singapore is positioning itself as a medical tourism hub. It aims to attract one million international patients per year by the year 2012. For example, Raffles Medical... one third of its patient load are international patients."

However, loading up on medical stocks is not something that all analysts agree on at the moment. Some observers see medical counters as defensive plays, thanks to the consistent demand for healthcare services. But others point to the limited size of the Singapore market.

Analysts said the ability of medical players to grow will depend on their success in tapping relatively larger markets outside Singapore.

Ms Tan said: "Healthcare providers have to look towards expanding overseas, which some of them have been doing. For example, Thomson Medical has ventured into Vietnam."

Medical providers will also have to worry about staff costs, given a more competitive market for qualified medical workers. - CNA/ms