Kiatnakin Phatra Securities (KKPS) views the recovery of the Middle East patient as an attractive entry point for the Thai hospital sector, highlighting four key catalysts in the second half of 2026.
First is the recovery of revenue from Middle Eastern patients, following the restoration of airline capacity to 70-80% of pre-war levels. Thailand’s inbound Mideast tourist arrivals showed significant improvement, with year-on-year declines dropping from 57% in April to just 2% in May, and visits from Qatar and the UAE growing by 25% and 13% YoY, respectively, in May.
Second, although Cambodian patient revenue faced a steep 60-80% YoY drop due to a Thailand-Cambodia conflict that started in late May last year, normalization is expected given the low base. Cambodian patients historically made up 1-4% of Thai hospital revenues.
For major hospitals—Bumrungrad Hospital PCL (SET: BH), Bangkok Dusit Medical Services PCL (SET: BDMS), and Bangkok Chain Hospital PCL (SET: BCH)—international patient revenue grew only 0-4% YoY in Q1, but excluding Cambodians, growth was a healthier 10-14%. This points towards a likely double-digit growth for international patients in the second half of the year.
Third, domestic patient revenue growth has slowed on weaker economic conditions and stricter insurance policies, but 2Q-3Q26 trends should improve over 1Q26, aided by an earlier start to the rainy season—which typically boosts demand for simple disease treatments, contributing around 10% of hospital revenue.
The fourth factor is the prospect of the Social Security Office (SSO) increasing hospital payment rates, including for chronic and high-cost care, which could be settled within this year. KKPS’ sensitivity analysis indicates a 5% rate hike could lift BCH and Chularat Hospital PCL (SET: CHG)’s earnings by 8-10% in 2027.
Despite the sector underperforming the SET index by 16% since the Middle East conflict, KKPS maintains a positive outlook. The sector currently trades at an attractive 18x 2026 P/E. Top picks are BH and Praram 9 Hospital PCL (SET: PR9), expecting strong Mideast patient flows post-Ramadan, with CHG as a wildcard due to its margin recovery and potential SSO rate upside.
