Equity Analysis /

Thailand (Bualuang): Healthcare - Healthcare resurrection

  • Vaccination rollouts benefit sector across many aspects

  • Exciting sector earnings growth outlook for 2021 and 2022

  • Best balance sheets ever

Bualuang Securities
21 January 2021

The Healthcare sector is the best play on the COVID-19 vaccination theme. We expect a strong coverage earnings recovery for 2021 and a return to pre-COVID era profits in 2022. Our top picks are BDMS (the biggest private Thai hospital group) and BH (the best fly-in patient recovery play). We also have a TRADING BUY call BCH, premised on cheap metrics and windfall income from COVID-19 testing. In contrast, we have margin concerns about CHG.  

Vaccination rollouts benefit sector across many aspects  

Healthcare is in investor spotlights ahead of national COVID-19 vaccination rollouts (two vaccines developed by Sinovac and Astra-Zeneca have been confirmed for use in Thailand’s vaccination program). The vaccines will initially be allocated to public hospitals, then to private hospitals. BDMS stands to benefit most from the vaccination rollouts, as it has 49 hospitals across Thailand. BCH will benefit if the vaccine is rolled out to hospitals participating in the Social Security Office program, as it has the most SSO registrations of any hospital group of nearly 900k. Mass vaccinations will be followed by the easing of quarantine rules for new arrivals from abroad, enabling a swift recovery in medical tourism (55% of BH’s revenue), possibly by 3Q21 (driven by MENA and CLMV markets).