Equity Analysis /
Thailand

Bangkok Dusit Medical Services PCL: New Omicron waves emerge, but 2H22 outlook is soft

  • New outbreaks (Omicron BA.4, BA.5), but not new for us

  • Unexciting 2Q22 outlook

  • Potential upside to 3Q22 number from Omicron outbreak

Bualuang Securities
7 July 2022

In the short run, the stock price may be catalyzed by new Omicron outbreaks, which could potentially boost BDMS’s 2H22 numbers. But Omicron’s symptoms are relatively mild, so hospitalization rates are likely to be low. BDMS trades at expensive PERs of 45.8x for 2022 and 42.0x for 2023 (1SD above long-term mean). Our HOLD call stands with a YE22 target price of Bt26.

New outbreaks (Omicron BA.4, BA.5), but not new for us

BDMS’s COVID-testing dived from an average of 7,900/persons/day in 1Q22 to 3,000/day in 2Q22. Similarly, its occupied hospitel beds slumped from 6,000 in 1Q22 to only 1,000 in 2Q22 and its occupied cohort ward beds from 2,352 in 1Q22 to 1,700 in 2Q22. Omicron cases probably peaked in Thailand in 1Q22. The emergence of new sub-variants (BA.4, BA.5) has generated market hopes of a new wave of COVID-related business for hospitals, but the mortality rate for Omicron appears to be only about 25% that of the Delta variant and the hospitalization rate also is much lower, so we don’t see the same scope for IPD revenue.