KGI Expects International Hospitals to Grow Faster, Eyeing BH and BDMS as Main Beneficiaries

As the Kingdom of Thailand’s economy is gradually recovering from the Covid-19 outbreak that led to more tourist arrivals, including medical tourism, hospitals are among stocks that should benefit from this recovery.

 

KGI Securities (KGI) expected the 2Q22F earnings of larger hospitals to grow YoY. Looking ahead, KGI expected hospitals with non-Thai patients to grow faster than hospitals with domestic bases, chiefly from an increase in international fly-in patients after the country’s full reopening July 1, 2022. On this theme, Bumrungrad Hospital (SET: BH) and Bangkok Dusit Medical Services (SET: BDMS) would be prime beneficiaries. HoKGIver, KGI maintained a Neutral KGIighting for the sector.

 

Bangkok Chain Hospital Public Company Limited (SET: BCH): 2Q22F earnings preview: Slight growth YoY
KGI expected BCH to report a 2Q22F net profit of Bt1.18bn (+2.6% YoY, -42.0% QoQ), accounting for 26.2% of its full-year forecast of Bt4.49bn. Looking ahead, the securities company expected BCH to gain positive momentum from the non-COVID business segment as the government declared COVID-19 endemic in July. KGI maintained its earnings projections with estimated net profits at Bt4.49bn (-34.4% YoY) for 2022F and Bt2.69bn (-40.1% YoY) for 2023F.
In addition, KGI maintained a rating of Outperform with a 2022 target price of Bt28.00 (DCF; WACC 7.5% and TG of 3.0%).

 

Bangkok Dusit Medical Services Public Company Limited (SET: BDMS): 2Q22F earnings preview: To rise YoYKGI expected BDMS to report a satisfactory 2Q22F net profit of Bt2.42bn (+66.8% YoY, -29.6% QoQ) without extra items. KGI believed this would still be a good result despite softening QoQ, as 1Q22 normalized profit was a new quarterly high for the company. Based on its forecast, BDMS’s 2Q21F and 1H22F net profits should account for 23.8% and 57.7% of its full-year forecast of Bt10.16bn. KGI maintained a rating of Outperform with a 2022 target price of Bt31.00 (DCF; WACC 8.0% and TG of 3.0%).

 

Chularat Hospital Public Company Limited (SET: CHG): 2Q22F earnings preview: Strong growth YoY
KGI expected CHG to report a satisfactory 2Q22F net profit of Bt748mn (+29.9% YoY, -44.8% QoQ), which would account for 26.1% of the new full-year forecast of Bt2.86bn. The 1H22F net profit should account for 73.5% FY22F earnings. Based on its 1H22 forecast, KGI raised the net profit forecast to Bt2.86bn (-31.9% YoY) for 2022F, while maintaining its forecast at Bt1.63bn (-43.0% YoY) for 2023F. KGI maintained a rating of Outperform with an unchanged 2022 DCF-based target price of Bt4.50.

 

Ekachai Hospital Public Company Limited (SET: EKH): 2Q22F earnings preview: A softer quarter
KGI expected EKH to report a 2Q22F net profit of Bt47mn (-28.3% YoY, -36.5% QoQ), accounting for 22.6% of its full-year forecast of Bt209mn. The 1H22F net profit should be Bt122mn, accounting for 58.1% of its full-year forecast. KGI expected EKH to gain some positive momentum QoQ in 3Q22, mainly due to an increase in the number of COVID-19 patients. KGI thought that a less severe outbreak would lead to strong business improvement in the non-COVID segment from Thailand’s re-opening by 2H22. KGI maintained a rating of Neutral with a 2022 target price of Bt8.60.

 

Ladprao General Hospital Public Company Limited (SET: LPH): 2Q22F earnings preview: Looks good despite softer quarter
KGI expected LPH to report a 2Q22F net profit of Bt69mn (-18.5% YoY, -54.4% QoQ), which would account for 22.5% of its new full-year forecast at Bt308mn. Based on its 1H22 forecast, KGI raised its net profit forecast to Bt308mn (-33.8% YoY). The 1H22F net profit should account for 71.7% of the new forecast. KGI foresaw a brighter outlook for the company. KGI maintained a rating of Outperform on the counter with an unchanged 2022 target price of Bt7.10.

 

PFund-REITs-IFF: Looks challenging in short-term
Although the COVID-19 situation is expected to improve from the worst of the situation in 2Q22, KGI thought that the number of infected patients would remain high due to the Omicron variant (led by BA.4 and BA.5 for now). Nonetheless, Thailand’s reopening has been unchanged by the government. This development will be positive for the country and businesses related to international tourists (i.e., hotel, retail business, industrial estates and transportation). Currently, KGI maintained its first tier of recommended funds JASIF, DIF and HREIT. The second tier are ALLY, GROREIT, CPNREIT and BTSGIF.