Equity Analysis /

Thailand (Bualuang): Healthcare - Time to maximize Healthcare loading

  • Going with the inflation flow

  • Best medical tourism recovery plays—BH and BDMS

  • All concerns over second-tier hospital plays already priced in

Bualuang Securities
10 March 2022

We are fully confident that the Healthcare sector is the safe-haven play in the prevailing environment of war in Ukraine and rising (energy cost-driven) inflation. BDMS and BH will lead the sector rally with strong business recoveries (led by fly-in patients). BCH and CHG are our second-tier plays—both firms marked remarkable earnings for the COVID era.

Going with the inflation flow

The Healthcare sector has consistently rallied during periods of high inflation—sick people don’t tend to be very price-sensitive, so hospitals can easily pass through higher costs. BDMS and BH are arguably the best inflation-equals-higher earnings plays on the SET. The historical record for 2005-20 shows that our Healthcare coverage’s sales and earnings correlate closely with inflation—correlations of 78% between Thai inflation and revenue sales growth and 70% for core earnings growth.