Sikarin Public Company Limited (SET: SKR) was selected by THAIPAT Institute to join the roster of listed companies worth investing in the annual ESG100 (Environmental, Social, and Governance) 2022 Rating Report. SKR’s accolade was due to its performance and potential for growth, the attention it pays to good governance, transparency in conducting its business, operational awareness of its environmental and social impact. Given these qualities, brokers are bullish about its performance in the post-Covid period after 2023, and recommend all investors to ‘gradually accumulate’ this stock, which is expected to hit a target price of 16.40 baht.
Mr. Suriyan Kojonroj, Director and Deputy Managing Director of Sikarin Public Company Limited, revealed that the finalists of ESG100 2022 were the result of evaluating 851 contenders to select qualified listed companies with outstanding corporate performance that also scored highly on environmental, social, and governance (ESG) metrics of THAIPAT Institute’s ESG Rating system.
Mr. Suriyan indicated that the prevailing COVID-19 pandemic has had and continues to have a severe impact on domestic and global healthcare systems, with major spillover across economic, social, and environmental circles. SKR’s management team met these ongoing challenges by adapting and making changes to optimise its operational and financial wellbeing.
“Being chosen to join the ranks of ESG100 further motivates the entire organization to continue developing in accordance with our sense of responsibility towards the environment, society, shareholders, and stakeholders. Our corporate vision is to generate value and ensure that we gain the trust and confidence of all stakeholders. We believe that good corporate governance can help us achieve our objectives, which are to develop in a sustainable, environmentally friendly way and provide all the necessary requirements to everyone who uses the services of Sikarin Hospital,” Mr. Suriyan said.
Dr. Pipat Yodprudtikan, Chairman of THAIPAT Institute, stated that SKR’s inclusion in the ESG100 reflects the company’s ability to sustain long-term growth, develop under principles of good governance, and operate in a mindful way of its environmental and social impact. The company was responsive to the needs and demands of all its stakeholders in delivering returns to investors as well as creating a sustainable organization that contributes to the community as a whole. By disclosing its operations in an open, easy to audit, and transparent manner, SKR has all the requirements of a non-mainstream stock suited to investors seeking good long-term returns.
Since 2015, THAIPAT Institute’s ESG Rating Unit has been responsible for developing the database on sustainable businesses in Thailand and selecting finalists on the ESG100 annual list. A pool of 851 companies, funds, and trusts were assessed by gleaning through six sources of information amounting to some 15,760 data points to determine which entities were worthy of investing in.
An analysis of SKR’s operations from 2022 – 2023 by Kingsford Securities Public Company Limited predicts that though SKR will continue to face pressure from COVID-19, conditions in Thailand are expected to improve going forward. Therefore, Kingsford forecasts that SKR’s revenue will remain stable at 6,423 million baht in 2022, up 1.13% against the previous year, and 6,557 million baht in 2023, or 2.09% higher than the preceding year.
This form of organic growth is projected to increase due to an increase in numbers of self-insured Social Security Office (SSO) patients. The number of self-insured patients will rise to 316,000 people in 2022, up 15.79% from the previous year, and grow by 11.26% to 352,000 people in 2023. Nonetheless, as Kingsford has set a target of 469,000 self-insured patients at SKR for 2022, it is expected that the numbers to date will continue to rise by a lot more by year-end.
As the relative ratios of Out-Patient Department (OPD) to In-Patient Department (IPD) are expected to return to normalcy in the post Covid-19 period, SKR has already made plans to accommodate more patients over this two year period, with initial plans to add 120 IPD beds and 17 new OPD diagnostic rooms.
In spite of these expanded service capacities, analysts predict a relatively stable and even slightly positive revenue stream but shrinking profits from 2022 – 2023. Net profit forecasts for 2022 stand at 1,244 million baht, down 10.85% from the preceding year, while 2023 figures will drop 25.52% to 926 million baht.
The lower than expected profits are due to the adjusted margins of these two years compared to the peak of Covid-19 breakouts in 2021 when the hospital and its staff extended their capacity in unexpected ways, such as building a Hospitel. Treating this flood of COVID-19 patients generated higher revenue with decent margins. Thus, if SKR’s profits were to be evaluated from 2020 – 2023, the company would have enjoyed an outstanding 38.37% compound annual growth rate (CAGR) over this period.
Even though business operations are expected to grow at a more normal pace after 2023, analysts remain bullish on SKR and recommend that investors ‘gradually accumulate’ its stocks. The target price for SKR in 2023 is 16.40 baht. (36.61 times P/E Multiplier)