Equity Analysis /

Thailand: Healthcare - Sector call shifts down to NEUTRAL

  • Coverage profit to dive YoY in 2H22 (a high 2H22 base)

  • Unexciting 2Q22 outlook; who will outperform?

  • Recovery in fly-in business from Middle East a game-changer

Phoowadol Phoosodngern
Bualuang Securities
14 June 2022

We have cut our sector call from OVERWEIGHT to NEUTRAL. 2Q22 Healthcare coverage earnings will decline seasonally QoQ (and CHG and BCH will mark YoY declines for the quarter). Then we expect aggregate profit to dive YoY in 2H22 (from a high 2H21 base). Our selective BUY theme is a strong recovery in fly-in business from the Middle East, so BH is our top pick.

Coverage profit to dive YoY in 2H22 (a high 2H22 base)

2H22 Healthcare coverage aggregate profit looks set to plunge 60% YoY from the unusually 2H21 base tied to COVID-related business (in sharp contrast, for 1H22 we project 114% aggregate YoY growth). Coverage core earnings peaked for the year in 1Q22, we believe (43% of our full-year forecast). Mean core margin is expected to slump from a peak of 20.0% in 1Q22 (up 1,100bps YoY) to 12.7% in 9M22. Our models point to coverage core margin of 13.2% in 2Q22 (up 40bps YoY), then an average of 11.5% for 2H22 (down 940bps YoY).