Thai healthcare equities gained nearly 2% in early Monday trading as traders have boosted their bets on a fresh spread of the Covid subvariant, which has been gaining new cases at a rapid rate in recent days.
As of 10.49 A.M. Bangkok time, the share price of Bangkok Dusit Medical Services Pcl. (SET: BDMS) rose THB0.75/share, or 2.54%, to THB30.25/share, with a trading value of THB360 million.
The share price of Bangkok Chain Hospital Pcl. (SET: BCH) rose THB0.50/share, or 2.35%, to THB21.80/share, with a trading value of THB165 million.
The share price of Bumrungrad Hospital Pcl. (SET: BH) rose THB4.00/share, or 1.71%, to THB238.00/share, with a trading value of THB171 million.
As the Songkran festival is over, the Thai people are now being warned about the spread of the novel Omicron subvariant XBB.1.16, which is suspected of causing a rise in Covid-19 cases in India.
Public health specialist and lecturer Dr. Thira Woratanarat from Chulalongkorn University’s Department of Preventive and Social Medicine pointed out that it is not yet clear how significantly the symptoms of the new subvariant XBB.1.16 differ from those of the initial variant Omicron. According to an Indian report, the symptoms of XBB.1.16 are identical to those of the parent Omicron strain: fever, cough, cold, runny nose, headache, body discomfort, and occasionally abdominal pain and diarrhea.
There is currently no proof that this subtype is associated with a more severe form of the disease.
Dr. Thira underlined the risk of contracting the virus, particularly during Songkran, as many people participate in water play and go to visit relatives in the provinces.
According to the Center for Medical Genomics at Thailand’s Ramathibodi Hospital, eight confirmed cases of the recently emerging recombinant coronavirus variant XBB.1.16 have been recorded in the country, with one of these cases showing signs of additional mutation and giving rise to the branch subtype XBB.1.16.1.
Daol Securities reiterates a BUY rating on BDMS with a target price of THB36.00, which is pegged to 2023E PER of 44x. The analysts at Daol expect 1Q23E net profit to grow +8% QoQ but edge down -2% YoY to THB3.36 billion. Overall revenue is predicted to increase +5% QoQ, +7% YoY as the number of CLMV patients exceeded the pre-COVID level, and that of local patients was flat given a high base in 1Q22 (substantial COVID-19 patients) but, excluding the COVID-19 patients in 1Q22, saw an increase on the back of higher local patients with chronic conditions. An occupancy rate is likely to decrease to 66% (68% in 4Q22 and 80% in 1Q22) given seasonally weaker demand amid a return to a normal situation in the aftermath of the COVID-19 pandemic.
BDMS has outperformed the SET Index by 19% in the past 12 months in response to earnings optimism following the borders reopening. The company is a beneficiary of booming demand for medical tourism as revenue from int’l patients has approached the 30% pre-COVID level from 27%, currently. On a valuation basis, the stock trades at an undemanding PER of 35.4x (-1.25 SD below a 5-yr average), while the company’s organic revenue has surpassed its pre-COVID level although the bottom line might feel the pain of a high base in 2022.
