Equity Analysis /

Thailand: Healthcare - Growing pains in Healthcare sector

  • Coverage earnings set to dive YoY and HoH in 2H22

  • Volatility in 2H22 through 2023; prefer high-end plays

  • Moderna vaccine likely to cause BCH some bleeding

Bualuang Securities
16 September 2022

The Healthcare sector may be one of the best places to be in a soft market, but macro-economic pressures are likely to build in 2H22, so we’re focused on quality growth. 2H22 through 2023, we see cost inflation pressures potentially squeezing some hospitals’ GMs. We prefer high-end plays, BDMS and BH, premised on the release of pent-up fly-in demand and pricing power. We’re cautious over BCH’s outlook.

Coverage earnings set to dive YoY and HoH in 2H22

The Healthcare sector has risen 31% YTD compared to 2% YTD slippage for the SET. Healthcare has meaningfully outperformed on stronger fundamentals, a flight to quality, and relative valuations. But the 2H22 outlook isn’t so favorable. The sector benefited from the Delta variant in 2H21 (record 2H21 numbers for many stocks) and the Omicron variant in 1H22. But there isn’t currently a new COVID-19 variant causing panic and mass hospitalizations, so most of the stocks under coverage will mark YoY and HoH slumps in revenue and profits for 2H22. Our models point to aggregate 2H22 Healthcare coverage core earnings of Bt4.5bn, down by 49% YoY and 43% HoH. Only BH looks set to mark YoY and HoH profit growth for 2H22. BDMS, BCH, and CHG will post YoY and HoH dives.