Demand among Middle Eastern patients recovered strongly, even during Ramadan. BH has the highest proportion of foreign patients of any Healthcare play (66% of its pre-COVID era revenue; now 56%). The stock currently trades at a 2023 PER of 34x, just above its long-term mean of 32x. We believe a bigger valuation premium is deserved, due to top-line growth and margin expansion.
Middle Eastern business rebounds faster than we had expected
The Ministry of Tourism & Sports announced that foreign arrivals to Thailand in April totaled 293k persons, up 39% MoM. Arrivals from the Middle East were 15k persons, down only 14% MoM, despite the fact that Ramadan runs Apr 2-May 1 this year (so a weaker seasonal effect than in the pre-COVID era). In 2019, when Ramadan ran May 5-Jun 3, there were only 20k arrivals from the Middle East in May (down 64% MoM), during a year of very heavy arrivals. To illustrate further, Middle Eastern arrivals totaled a modest 18k in Mar 2022, justy 32% of the Mar 2019 number, while arrivals during April 2022 (Ramadan month) were 76% of the May 2019 (Ramadan month) number. Based on the speed of the YTD recovery in Middle Eastern arrivals, we expect full-year Middle East tourism to hit 55-65% of its 2019 level (400k persons).