Goldman Sachs Sees Silver Lining in Thai Healthcare Stocks amid Economic Turbulence

Goldman Sachs has identified significant potential within Thai healthcare stocks, BDMS and BH, even as they face short-term earnings challenges, highlighting their strong competitive edge and robust balance sheets.

The shares of BDMS and BH have seen declines of 23% and 40%, respectively, in the past 6-7 months, compared to a 26% dip in the SET index. This depreciation has brought their ratings to -2 standard deviations in terms of EV/EBITDA, reflecting the prevailing macroeconomic uncertainties and less optimistic revenue forecasts.

Given the outlook for weaker GDP growth and lower oil prices, Goldman Sachs has revised its 2025 revenue expectations downward for these companies. Projections for core profit are also being downgraded due to anticipated reductions in margins and potential credit losses.

In response to the challenging macroeconomic environment and slower earnings growth, Goldman Sachs is amending its target EV/EBITDA multiples to a 10-year -1 standard deviation. This adjustment aligns with the APAC Equity Strategy Team’s forecasts for the SET index.

As a result, the 12-month target prices for BDMS and BH have been reduced by 9% and 23%, respectively. Nonetheless, Goldman Sachs retains a ‘Buy’ recommendation for these stocks, with expected upside potentials of 40% for BDMS and 33% for BH. Despite current valuations being at -2 standard deviations, the firm notes that these healthcare providers possess a strong moat, solid balance sheets, and impressive return on equity. Future re-rating catalysts may emerge from a recovery in revenue growth and the stabilization of margins during the latter half of 2025 through 2026.